Fraud Risk Management

Assessing, improving, and monitoring anti-fraud programmes are key elements of an effective internal control structure.

Many have a long way to go to address the challenges of fraud and corruption. Fraud remains a very real risk in the current environment, and companies are still failing to address this risk in a robust manner. 

Internationally, regulatory requirements have also driven the demand for a robust anti-fraud programme. As a result of both increasing acts of fraud and the heightened regulatory environment, board members, independent auditors, and other stakeholders are asking executive management pointed questions about how the company is responding to these risks and regulations: 

• Do you have appropriate fraud governance activities and fraud risk identification processes?

• Do you know the most common types of fraud in your industry?

• Do you know what kind of fraud you are susceptible to within specific business functions or locations?

• Do you have internal controls to mitigate your key fraud risks?

• Have you tested the effectiveness of your anti-fraud policies and protocols?

• What fraud investigation protocols do you follow when a fraud is detected?

Fraud – Are you doing enough?

Five key factors organizations should consider in relation to fraud risk management: 

1. Trust alone is no longer enough - increasing use of third parties, outsourcing arrangements and rapid business change means that more people than ever before have access to information, systems and controls.

2. Training and awareness amongst staff at all levels is key - human nature cannot be changed, but human behaviour can.

3. A clearly communicated Code of Conduct helps to set clear standards against which behaviour can be measured - without this, employees are left to work it out for themselves.

4. Companies need to consider implementing formal protection for whistle-blowers – fear of reprisal can prevent staff from reporting genuine concerns.

5. Companies need to be ready to respond to allegations of fraud through development of investigation protocols - a clear fraud response plan will increase the likelihood that investigations will be conducted both effectively and ethically, meeting expectations of employees, regulators and other stakeholders.

Benefits to your organization

An anti-fraud programme should help executive management answer these questions by assessing each element of the company's anti-fraud defenses, identifying opportunities for improvement, providing a process for implementing the improvements, and helping management understand how to monitor the effectiveness of the programme going forward. 

We believe that a robust anti-fraud programme should: 

Provide tangible evidence of a culture of integrity

Help prevent fraud and facilitate early detection

Improve monitoring and training

Limit unpleasant surprises that affect reputation, credibility, and share price

Increase confidence of major stakeholders[/li] [li]Reduce potential for class action lawsuits

Our experience

Setting the tone

Our client recognized a need to develop a robust fraud risk management programme. 

We created a bespoke fraud risk management programme comprising risk assessments, control evaluation and training.  Following several meetings, we were able to determine the company's fraud risk profile and identify gaps in the control environment. We developed anti-fraud policies to guide employees through the complex issues and developed a training pack to be delivered across the business to help raise fraud awareness.

Being proactive

Our client sought help in performing fraud risk assessments and controls monitoring across its global business. 

We performed fraud risk assessments globally, conducted interviews with key stakeholders and carried out compliance assessments across high risk areas of the business. 

During the course of the fraud risk assessments, we employed fraud investigation techniques. We were able to efficiently identify millions of pounds in questionable expenditure. This included duplicate charges, expenses unsupported by proper documentation, violations of the code of conduct and approvals inconsistent with the company's policies. 

Plan reaction

Our client required assistance to effectively structure its global internal investigation framework. 

We assessed the company's fraud response plan, including investigation, remediation and disciplinary activities and developed a road-map setting out how the company's governance around matters of integrity could be improved. 

Our work provided the company with an effective global internal investigation framework which increased consistency of response to allegations and reports of impropriety. 

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