Obviously, the dishonest person that committed the fraud is to blame, right? Of course, but that is only part of it. Many others are responsible in at least some way shape or form. The Board of Directors has a fiduciary responsibility to the organization and is expected to provide oversight and make decisions for the good of the organization. Why didn't they ask more questions when expenses were over budget? Why didn't they ask if the organization has implemented any fraud controls? Did they make it clear to management that fraud was a concern? Management is responsible for monitoring the operations. Are they doing their job properly? Are they taking short cuts? Do they trust a certain long time employee enough not to review their work? The long time trusted employee is often the one that commits the crime because the opportunity is there. In addition, other employees may have suspected that something inappropriate was occurring, but never spoke up or didn't have an outlet. Other employees may not have been doing their job correctly allowing the fraud to occur unnoticed.
Preventing fraud is a process that starts from the top at the board of directors and filters down through the staff of the organization. Just the notion that the organization is aware of fraud and it will not be tolerated is a strong deterrent. It is important that the Board of Directors takes an active role in preventing fraud. This can be done by merely making fraud a priority and declaring a commitment to deter fraud. Hopefully, management will jump on board with the commitment and it will become a concept within the organization.
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