Can Fraud Ever Be Totally Eliminated
A few weeks ago, I was talking with a potential client who had been experiencing unusual issues with their business. They suspected that certain employees were not being totally honest and forthright. We were having discussions to determine better where the problems started and how they were allowed to continue.
I was straight-up asked if the total elimination of fraud could be achieved. At first, I was taken aback by the question. Still, after realizing the seriousness of the question, I responded with the short answer – probably not – given the nature of their business and human behavior. I indicated that fraud can be mitigated but not eliminated, and I offered the following thoughts after some time to reflect.
In my view, here are some reasons why total elimination is impossible:
- Cost-prohibitive, as most organizations cannot afford to monitor every transaction.
- Humans are not perfectly honest as long as they have their own needs and imperfect oversight; some of them will try to game the system for their own benefit.
- Concentration of Power and discretion over resources, i.e., money, ensures that the potential for corruption will always exist.
- Weak or nonexistent controls will always invite individual failures.
Having said all this, I did indicate that there is hope. Fraud can be mitigated or dramatically reduced by the following:
- Transparency, including surprise audits or some other third-party verifications or reviews. One of my favorite sayings is that the things that get monitored get done.
- Ensure proper recordkeeping by maintaining and reviewing all source documents.
- Proper Incentives by rewarding honesty and dissuading wrongdoing.
- Proper use of technology by automating as many of the routine functions as possible.
- And last but certainly not least involves social norms. In today’s political environment, I see way too many instances of corruption being overlooked or socially accepted by some segments of the community.
- We must look at corruption and fraud as shameful acts instead of being excused as many of today’s public figures seem to want to do.
Conclusion – in my view, fraud and corruption are like a disease that cannot be fully eradicated, but it can be controlled to prevent further outbreaks. Countries vary widely in corruption levels, which indicates it’s not inevitable but can be managed; however, diligence and discipline are required.
Prepared by Terry L. Stroud – January 2026
