What are the factors that promote fraud in companies ??

Lack of administration on employees & other top management officials can cost you heavily. You don't know who might be the devil in disguise. So, its always better to have a proper control on the people who work with & under you.

To avoid scandals the tone at the top is most essential. In case the top management itself deviates there must be a check by a governing body like board consisting other than top management mainly external people.

Strict laid down policies and procedures to be implemented across the organisation, the same to be communicated and the effect any deviation also to be spelt out. Apart from this  frequent audits to be conducted for compliance with respect laid down guidelines and laws.

Above all ethics culture to be created across the organisation. The vigil blowers to be protected and rewarded suitably

NONE JOINS A COMPANY  WITH AN INTENTION TO INDULGE IN FRADULENT ACTIVITIES.PEOPLE WHO ARE HAVING A BENT OF MIND TO EARN MONEY BY HOOK OR CROOK IDENTIFY THE LACUNAE AND START INDULGING IN  SUCH ACTIVITIES.CHANCES ARE VERY LIMITED FOR SUCH PEOPLE IN COMPANIES HAVING A FULL FLEDGED  EFFECTIVECONTROL AND MONITORING SYSTEMS.

Personal issues can also take owners' focus off the business and leave them vulnerable to fraud.

For example Interactive Solutions Inc. in Memphis, Tenn. In 2002, the videoconferencing company achieved its then-highest annual sales, about $6 million, and was recording double-digit profit margins.

Amid the success, Mr. Myers suffered a personal loss: His brother, John, died at age 50. The two had been close, and Mr. Myers started taking occasional days off while in mourning. His attention wandered from the company's finances, and he began relying more heavily on Linda Merritt, a bookkeeper who had come on board a month before John's death, to keep things straight.

The thefts—in the form of bogus bonuses and commissions by the dozens, according to evidence later presented in court—weren't difficult to verify. When the outside auditor showed Mr. Myers some of the checks for such payments, he says, "Some of them were to a receptionist. I thought, 'A receptionist doesn't get commissions, she answers the phone.' I felt like such a fool for not knowing this was going on."

If the organisation has strict security policy and create mandatory awareness through trainings, compliance through KRAs etc.. mechanisms fraud should reduce.

I noticed in some of the organisations, sending outside mails, access to printer, internet, personal emails, USB ports  etc.. are strictly prohibited to certain levels. I am sure by well thought and proven policies without impacting employee privacy and individuality fraud can be averted.