What are the Implications of Fraud in a Top Company?
Corporate fraud is one of the nastiest incidents that can happen to a company of renown. Companies actively engage in fraud risk management in India and take all possible steps to prevent it with regular audits. Here are a few implications of fraud in a top of the line company.
- Loss of finances: This is the most obvious fallout. If an employee misappropriates the resources of a company, the losses are directly proportional to it. And if the management of the company indulges in false financial reporting, it leads to losses in equity and civil suits when the act is uncovered by auditors.
- The confidence portrayed to the public: After the discovery of a fraud, the company has to deal with a lot of mistrust from the public. If small businesses are prey to fraud, the loss of image and good faith is often a death knell in this age of fierce competition. Top companies may recover, but it takes quite a bit of time, and it also means that creditors will be wary and strategic alliances put off. Membership to various trade organizations is also endangered.
- Company Morale: The effect on the spirit of employees in the organization is often shattering to say the least. It causes a lot of embarrassment and distrust between the various tiers of management in the company and the ripple effects can be felt at every level. If an uninvolved employee chooses to leave the company in the future, he/she carries the tainted history of the company in his/her record.
- Cost of Audit increases: If the management of the company has been indulging in fraud, they will be looked at with a higher audit risk than before. This implies that future auditors will perform closer scrutiny of the books, and have a prejudice against the company. And with more audit procedures, the cost of the audit skyrockets.
Netrika Consulting is a leading fraud risk management company in India, and is well known for thorough policies and procedures. Try them so that they can actively help your company avoid such a debacle.