Karen, a friend of yours, recently started her own business, The Bike and Boulder Company (B&B). B&B specializes in the sales of mountain bikes and rock-climbing equipment. Karen is putting the finishing touches on her company policies and procedures. She knows you are taking a fraud class and asks you to review what she has completed thus far. You quickly notice that Karen has neglected to address fraud and fraud prevention in her policies and procedures. What policies and procedures would you suggest Karen implement to prevent and detect fraud at B&B?

Karen should start exercising full control over the organization.Should look for the conspiracy within the organization.Should set a punishment system.Whistle blowing system should be adapted. Proactive auditing.

Explanation:

All of these methods are effective to prevent fraud. Karen can chose any of these procedures to detect and prevent fraud at B&B.

Exercising full control over the organization: Sometimes employees tend to go for fraud when they feel that their boss doesn't have any control over the organization. So, it's necessary to exercise full power over the organization.Detecting conspiracy within the organization: Conspiracies occurs and are the worst fraud a company can face. So, detecting a conspiracy and and ending it should be the aim of the leader. A punishment system: To ensure that employee will comply with the leader's policy, there should be a punishment for fraud. Obviously not physical punishments.Whistle blowing: It's hard to know who is wrong and identifying fraud is a very sensitive issue, so to make it easy there should be a whistle blowing system for example, you have a trustworthy employee working for you in the office and keeping an eye over the other employees, and you tip him off for the information he provides. Proactive auditing: There should be auditing in every month, that's what proactive means reacting before anything happens.