Combating Cheque Fraud in Banks: The Role of Internal Auditor and Technology Bhasin Madan Lal Dr.1,* *Head, Accounting Department, Mazoon College, P.O. Box 101, P.C. 133, Muscat, Sultanate of Oman * E-mail at: madan.bhasin@rediffmail.com
The unflagging popularity of paper-cheques, together with the ready availability of desktop publishing software and laser printers, has contributed to an alarming increase in cheque frauds. Moreover, varieties of frauds in banks across the globe are increasing and fraudsters are becoming more sophisticated and ingenious. In addition to driving up operating costs, fraud costs a bank its reputation until the customer and depletes organizational morale. This article examines why cheques are popular instruments, what is the magnitude offrauds in Indian Banks, and hew to integrate the expertise of internal auditors, as well as, technology in order to detect and prevent frauds in banks. The immediate responsibility for ensuring adherence to prescribed systems and procedures, including proper housekeeping, vests with the branch head. Internal auditors occupy a special position within a bank to assist in the prevention and detection of frauds, hi addition to considering the common types of frauds ‘signals’, auditors can take several ‘proactive’ steps to combat frauds. Combating frauds requires training, account screening, signature verification, and information sharing with regulators and local authorities. One important challenge for bank internal auditors is the examination of new technology applications for control and security issues. Technology is like a double-edged sword, which can be used to perpetuate, as well as, detect and prevent frauds. Several innovative technologies like ultraviolet imaging, high-capacity 2-D barcodes, data glyphs, biometrics, data mining, etc., are turning paper documents into machine-readable files that can be processed and analyzed by automated equipment. As these new technologies become more widely used, banks and businesses can work together to curb the most common forms of check fraud before massive losses are incurred. Top |