Magazine article The CPA Journal

The Role of Research in Fraud Prevention

Magazine article The CPA Journal

The Role of Research in Fraud Prevention

Article excerpt

The focus of antifraud efforts is evolving from detection to prevention. Antifraud professionals would agree that, at best, it's difficult for most victims to recover assets stolen as a result of fraud schemes. Fraudsters tend not to save their ill-gotten gains, and by the time a fraud is detected, the victim can generally kiss the stolen assets goodbye.

Fraud has had a significant impact on the bottom line of organizations worldwide. One of the biggest challenges for fraud examiners is staying a step ahead of white-collar criminals. Rather than simply reacting to this problem, professionals can take proactive measures to help substantially mitigate fraud losses. Increasingly, practitioners are turning to cutting-edge research for ideas, insights, and tips to reduce the incidence and impact of fraud and financial crime.

Potential Research Areas

To address these issues, thought leaders from the Institute for Fraud Prevention (IFP)-a coalition of business, government, and academic institutions dedicated to multidisciplinary research focused on the prevention of fraud and corruption-have shared their ideas on potential research areas and on how the profession might find answers to the following questions:

* How long should prison sentences be for white-collar criminals in order for them to be effective? Is the primary purpose of incarceration retribution or deterrence? Do longer periods of incarceration provide greater deterrence for others who might consider committing fraud?

* Is there a particular personality profile that can help predict who is likely to commit fraud? (This concept might remind some readers of the movie Minority Report, and they might wonder how such information could be used without violating individuals' civil liberties. No one is suggesting that individuals be prosecuted for crimes they might commit in the future, but preventative training could target those individuals who represent a heightened risk of committing fraud.)

* Are there specific types of transactions that could help identify money-laundering activities? (Financial institutions are required by the Bank Secrecy Act of 1970-as amended by the Patriot Act of2001-to establish anti-money laundering programs; these institutions are also willing to put their money behind quality research in this area)

Challenges and Benefits of Research

In the past, some academics were accused of "straying too far off the reservation" for their research to be worthwhile. …

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