Fraud. The word conjures up different images for different people. Some prefer not to think about it. Others vehemently deny such things happen at their workplace. Still others want to take the bull by the horns and kill it. No matter which category you fall into, truth is, fraud does exist in the workplace and there are some simple steps you can take to deter it.

For starters, fraud is a very complex issue and has many “gray” areas. To some, fraud is as simple as employees taking stationery, pens, pencils and the like home from work. To the employee, it may be no big thing; after all, it's just a pen! For other employees, it may be greed. But then, for some greed is not the sole factor that motivates employees to commit fraud.

So what are some of the factors that motivate workers to commit fraud?

Walt Pavlo, Jr., formerly a MCI senior collections manager, who served a two-year sentence in federal prison for defrauding MCI customers over a six-month period resulting in $6 million in payments to the Cayman Islands, says, “In my own case, I was faced with a number of pressures associated with meeting financial goals of the company. I then applied that pressure to my own personal goals of success that I narrowly, and wrongly I might add, defined as wealth … a direct relation to greed.” For some time thereafter, Pavlo continued to meet his financial goals, even if “that meant cheating.”

Is fraud more prevalent at bigger companies than at smaller ones?

When Pavlo was in prison, he says he met more people from small private businesses than larger public or private businesses. “While the pressures for performance seemed to be a part of the small business criminal, I noted that the problem seemed to be a lack of oversight,” says Pavlo. “Many of these individuals were either owners or top executives with the small company who were trying to hide news related to sales or bad debt. The direct correlation was the sales or bad debt as it related to a line of credit from a bank or individual. They hoped that they could make up for negative news later if they just “fudged” the numbers for one period … then they did it again and again,” he added.

And the age-old question … how does fraud prevail? Does it really stem from the top or does it involve a group of people somewhere in between?

“In my experience,” says Pavlo, “the tone-at-the-top played a significant role in my decision-making. While every individual is responsible for their own decisions, there is tremendous influence made by leaders in a company. If they choose to make decisions that even have the appearance of being unethical, it opens the door to the idea that ‘this might work for me as well.'” Pavlo adds that whatever has been written in any manual or statement on a motivational poster in the office goes out the door when one sees a senior executive act. “That action can be positive or negative, but either way the executive needs to know that their example will be followed.”

Want to learn more? More information on how you can detect fraud, how you can place red flags and other pertinent questions will be answered on May 16th at the upcoming AICPA Webcast, Corporate Fraud in America . . . What's Really Going On in America? Besides Walt Pavlo, our expert panelists will also include Timothy Hedley, PhD, CPA, CFE, a Partner in KPMG's Forensic practice based in New York, where he serves as National Forensic Services Lead and as Global Coordinator for the firm's Fraud Risk Management initiative; Neil Weinberg, a Senior Editor at Forbes magazine, where he focuses his coverage on Wall Street, corporate and pension fund scandals, and the dark side of whistle-blowing; and Greg Farrell, an investigative reporter for USA Today . He has covered a number of corruption trials for USA Today and written investigative reports on wrong-doing in American business.

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Sukanya Mitra  is Managing Editor of the AICPA's Insider™ electronic newsletter group.