Billing schemes are cited as the most common and costly occupational frauds and defined as the issuance of payment to a non-existent vendor or to a company that is controlled by an employee. Preventing billing schemes requires that the employer be familiar with vendors they conduct business with, ensuring that employees cannot write checks to vendors who they set up with the company, and vendors addresses need to be checked against employee addresses. The provision of one of the scheme methods provides insight into the type of fraudulent activity possible within a company, yet does not further explicate other schemes and their roles in asset misappropriations. Though fraud cannot be completely eliminated, Wells provides a listing citing preventive measures that can be put into action. Initial steps include setting up a checklist that will allow a company to implement an effective anti-fraud program. This list includes education employees about the detrimental effects of fraud, raising the...

Employees that are loyal to a company are more likely to report fraud within a company because they feel a sense of duty to their employers; reporting fraud within a company may also stem from being upset that a fellow employee is committing fraud. Anonymous hotlines allow for the reporting of fraudulent behavior and activities without the fear of being exposed; anonymity among employees will also help to increase tips.
Fraud prevention is most effective if the company and employees collaborate. If employees are made aware of the repercussions of fraud and how it affects job costs, raises, reputations and individual integrity. Developments in software technologies, specifically in textual analytics, will also aid in the detection, deterrence, and prevention of fraud.

Reference:

Nilsen, K. (2010). Keeping Fraud in the Cross Hairs. Journal of Accountancy, 209…