Fraud busters at work

Corruption is not limited to public sector

Clayton Thomopoulos

Is your organisation 100% fraud- and corruption-free?

“Despite a positive answer to this question being very rare indeed, this should be the status that all organisations, both public and private, strive to attain,” says Deloitte director for Risk Advisory Forensics, Clayton Thomopoulos.

He points out that although some may argue that the ability to attain an environment that is 100% free of fraud and corruption is impossible, the opportunity lies in an organisation’s ability to view this as a challenge and not an excuse. The success of such a challenge is dependent on implementing measures to ensure stringent processes are in place to prevent, deter and discourage such behaviour.

“Measuring an organisation’s fraud health is critical in establishing a baseline against which fraud prevention, detection and investigation initiatives can be measured in terms of impact, effectiveness and awareness. A Fraud Health Check will reveal employees’ perceptions and understanding of fraud and corruption in the workplace. Ideally, this process should be anonymous in nature in order to ensure positive response rates and candid feedback from employees,” says Thomopoulos.

He points out that the foundation of an organisation’s stance against fraud and corruption is dependent on a clear and unambiguous strategy that must define not only the stance of an organisation, but also the responsibilities of all employees in the fight against these crimes. It is good practice to review the strategy annually to ensure alignment to the changing business landscape and developments within the fraud risk management arena.

Thomopoulos says: “An organisation’s resistance to fraud and corruption will have a direct impact on the probability of fraud and corruption occurring. The key to improving and maintaining resistance is largely dependent on the specific anti-fraud and corruption controls that have been implemented. Adherence and testing of the controls is the non-negotiable factor that will lead to success.

“A consistent zero tolerance approach to dealing with fraud and corruption forms the basis of a sound fraud and corruption response plan. The plan should detail the reporting requirements and procedures for all employees, should they detect or identify an incident. It should also detail what steps are required of the organisation and its employees when dealing with or reporting these matters,” he adds.

Awareness training and constant communication are fundamental building blocks in creating employee awareness and understanding of the issues pertaining to fraud and corruption. Thomopoulos points out that, historically, while there has been a focus on awareness training, many organisations have overlooked the testing of employees’ understanding of the problem.

“A true measurement of an organisation’s awareness levels will be dependent on the ability and frequency of employee testing,” he says.

Data analytics has become an integral part of the fraud and corruption detection toolset, and any organisation that does not make use of this technological aid will not be fully capable of detecting fraud and corruption on a continuous basis. Technology in the workplace has made the availability of data from electronic transactional records more accessible, thereby allowing for the use of expert data analytics capabilities to manage the detection of fraud quickly and effectively.

This detection technique allows for the automated analysis of large volumes of data against specific fraud detection parameters in a much shorter time than a thorough physical audit, throwing up red flags and highlighting shady or questionable business practices.

“Research and experience has shown that anonymous fraud reporting via hotlines has become one of the most effective mechanisms for employees and whistle-blowers to report suspicions of such activities. Confidentiality is guaranteed and employees feel secure they will not be persecuted or intimidated for reporting suspicious and illegal behaviour within the organisation. Employees want job security and are actively taking the responsibility of ridding their workplaces of illegal and corrupt behaviour,” says Thomopoulos.

The above is a mere snapshot of some of the more important factors in managing fraud and corruption risks and are by no means exhaustive in terms of the measures that an organisation needs to have in place to combat fraud and corruption effectively.

Without these measures, an organisation’s propensity to fall victim to fraud and corruption increases.


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Issue 83


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