Prevention and detection of corporate fraud : procedures practiced in Singapore

• Main Authors: Chan, Grace Ai Mun, Ong, Siok Hui, Yew, Sook Yin
• Other Authors: KB Ambanpola
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::Operations management
• Online Access: http://hdl.handle.net/10356/62971
• Institution: Nanyang Technological University

In view of the growing impact of corporate fraud, this project examines some of the common procedures practised by local business organisations in preventing and detecting fraud. Together with a review of the literature, this report presents the findings from a questionnaire survey which was designed to elicit information regarding prevention and detection of fraud from 100 local auditors and accountants. The questionnaire survey indicated that the most common type of fraud was committed by employees (76.67%). Management fraud is, on the other hand, perceived as the most serious (77.42%), and the most difficult to detect and prevent {68.97%). There was no single most dominant reason for the difficulties in fraud detection. However, respondents considered "Perpetrator's objective is to hide fraud and he is often familiar with the control procedures", as a more prevalent factor contributing · to the difficulties in fraud detection. The common procedures available for fraud prevention and detection that were identified in the survey include: (1) implementing a system of internal control, {2} establishing an audit committee, (3} setting up an internal audit unit and, (4} others (eg. fraud auditing, ethical education, etc). In the area of internal control, ensuring compliance with section 199(2A} remains a significant issue that invites further research. Despite the fact that respondents perceived existing legal requirements, inclusive of section 199(2A}, as sufficient and effective in combating fraud, the adequacy of follow-up to ensure compliance with section 199 ( 2A} remains questionable. The roles and effectiveness of audit committees and internal audit units have been examined and our indicated both these control procedures are effective in combating fraud. survey has moderately This report rounds up with a discussion on other feasible measures for prevention of fraud. Conflicting views were exhibited by the auditors and company accountants who responded. In particular, prosecution/high penalty has been rated as the most effective measure among the seven measures identified. The battle against corporate fraud remains a continuing challenge for many corporations in today' s world of ever increasing sophistication of fraud commission. Indeed, knowing how to prevent and detect fraud is perhaps the most effective way to avoid the heavy losses.