What common mistake might increase risk for fraud?

Failing to communicate expectations clearly increases the risk for fraud because it creates ambiguity regarding acceptable behavior and organizational procedures. When employees are unsure about what is expected of them or the standards to which they are held, they may unintentionally engage in actions that could be considered fraudulent. For instance, without clear guidelines, an employee might misinterpret policies on expense reporting or financial practices, which could lead to opportunistic behaviors, such as inflating expenses or misrepresenting financial information.

Clear communication of expectations helps set a strong ethical foundation and reinforces the organization's commitment to integrity. It ensures that all employees understand the boundaries of acceptable behavior and the importance of adhering to established policies. By clearly outlining roles, responsibilities, and consequences for violations, organizations can foster an environment where ethical behavior is prioritized and potential fraud risks are mitigated.