Total losses caused by fraud annually have been estimated at about $6.3billion, where the median losses in large companies with more than 10,000 employees were higher at about $160,000, and the smaller businesses at $154, 000.
However, the cumulative impact of the many losses recorded by small businesses is much greater with a frequency of 30 per cent while large companies had 20.5 per cent.
An expert on fraud matters, Don Ogbonnaya, said this during training by the Association of Certified Fraud Examiners (ACFE) for members and non-members in Lagos recently. Ogbonnaya, in one of the ACFE’s “reports to the nations” estimated that fraud accounts for about five per cent of losses incurred by organisations annually.
He said organisations have numerous risks to contend with in their quest for business success, noting that the risk of fraud is one of them.
Speaking on, “Money Laundering, Terrorism and Financial Crimes-the Role of the Fraud Examiner,” Ogbonnaya, who noted that fraud, is a threat that all businesses must deal with no matter their size.
According to him, money laundering provides the fuel for drug dealers, terrorists and arms dealers to operate and expand their operations, and if left unchecked, can erode the integrity of a nation and the world’s financial institutions.
He argued that money laundering is a dynamic and robust circular process which can only be stopped when the legitimate business world implements strong coherent anti-money laundering procedures in a serious way.He said it will also reduce when drastic action is taken by relevant authorities against the jurisdictions, people and institutions that make the washing cycle possible.
“This is a severe problem – a business and financial apocalypse – that now merits such a draconian action.”
Earlier, ACFE’s President, Prof. Godwin Oyedokun, in a presentation on, “Investigating Fraudulent Earnings, Management and Aggressive Accounting Practices,” said the essence of the training was to ensure that members complied with global requirements to meet their training hours, to acquaint them with latest developments in fraud and tax environment, so they can know how to support their clients in doing the right thing to avoid falling foul of the law, which at the end of the day attracts penalty.
“We are teaching our members on accounting principles, conventions and standards that are correct and manipulated for their own benefit.
“For instance, you can finance a business through debt by collecting loans or by share. If you collect by share, you don’t gain anything in form of tax, you pay more taxes. If it is by debt, you deduct the interest you give to the debt owner from your profit before you pay tax, so what you pay as tax is lower.“Somebody can use that to manipulate earnings but it is still correct but not ethical. That is why we are saying that the place of ethics is different from law. Something may be ethical but not legal,” Oyedokun said.
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