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Exactech Newsletter May 2019

Monthly fraud risk management newsletter containing topical articles on fraud prevention, detection and investigation. Articles also focus on digital forensics, cyber crime and social-media and internet risks. Articles appeal to a wide variety of people in forensics, internal audit, risk management, human resources, compliance and ethics.

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Mario Fazekas
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51 views

Exactech Newsletter May 2019

Monthly fraud risk management newsletter containing topical articles on fraud prevention, detection and investigation. Articles also focus on digital forensics, cyber crime and social-media and internet risks. Articles appeal to a wide variety of people in forensics, internal audit, risk management, human resources, compliance and ethics.

Uploaded by

Mario Fazekas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FRAUD PREVENTION, DETECTION & INVESTIGATION

Monthly Newsletter
May 2019

Welcome to the May issue!

Fraud Indicators for Company Secretaries


Part 4
“In the digital age,
Here is part 4 of the article on fraud indicators. Last
month we looked at fraud prevention, the second of
4 pillars of managing fraud risk, and this month we
EDUCATION
look at the third pillar, namely ‘Fraud Detection’. is the
Even the most robust fraud prevention
programme will not curb all instances of fraud.
new system
Consequently, anti-fraud programmes must of
also include controls designed specifically to
detect fraud as soon as possible after it has INTERNAL
CONTROL”
begun. ACFE research shows that tip-offs are
consistently the most common method by

which frauds are uncovered. According to the ACFE 2018 Report to the
Nations on Occupational Fraud and Abuse, more than 40% of
occupational frauds are detected by tip-offs, and over half of those
tipoffs come from company employees. Implementing a hotline that
provides employees and other parties with an easily accessible means of
coming forward with information is among the most effective anti-fraud
defences an organisation can have. (And don’t forget to regularly train
your employees on how the hotline works – if they don’t trust it and/or
don’t understand it, they won’t use it!)

Additionally, an internal audit function, particularly one that undertakes


periodic fraud audits that incorporate an element of surprise, can help bolster
management’s ability to identify potential instances of fraud. Within these audits
or as part of other proactive measures – the use of data mining and data
analysis to look for anomalies and data patterns that indicate fraud or
manipulation can be an excellent fraud detection tool.

Process-specific internal controls, such as segregation of duties and


management review of processes and transactions, provide further layers of
oversight and additional checks-and-balances that make it less likely that fraud
will be able to remain undetected for long.

Editor: Mario Fazekas Mobile: +27 (0)83 611 0161 Office: +27 (0)11 475 2525
www.exactech.co Email: [email protected]
The American Institute of Internal Auditors, The American Institute of Certified Public Accountants, and
the Association of Certified Fraud Examiners recently sponsored a guide to managing the business risk
of fraud. This guide spelled out key human resource practices that can be helpful in preventing fraud and
in last month’s issue we looked at Background Screening. This month we look at Anti-fraud Training:

2. Anti-fraud Training
An organization can hire or promote competent individuals who, having undergone appropriate
background checks, represent a low fraud risk. It is possible that such individuals have a comprehensive
understanding of what fraud is and what its red flags are, and an appreciation of its potential to devastate
an organization.

There should not, however, be any exemption from receiving an initial orientation and ongoing education
on the fraud risk management program in place, regardless of the individual’s position in the
organization.

Such education serves to establish and reinforce the tone from the top regarding the individual’s
responsibility and the process to deal with suspected fraud.

An organization’s HR department is often responsible for developing and providing the necessary
training on the purpose of the fraud risk management program, including the codes of conduct and
ethics, what constitutes fraud, and what to do when fraud is suspected.

The effectiveness of this training is dependent on mandatory attendance with periodic updates and
refresher sessions.

The 2018 ACFE


global fraud survey
results show that
organisations that
provide regular anti-
fraud training for
both employees and
Management /
Executives, can
reduce their fraud
losses by an average
of 50%.

Many organizations refuse to train their staff members on how to prevent &
detect fraud, yet criminals are learning daily! Among the many items up for
sale on the
EXACTECH Dark Web are fraud guides — instruction manuals
FORENSICS designed
Phone: (555) to
555-5555
teach
123 Fake Street, City,criminals
ST 12345 how to ply their trade. Read more here.
Fax: (555) 555-0000

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