How to Combatting Corporate Fraud in the Workplace?

Research shows that corporate fraud is indiscriminate of employer size, industry or geography, therefore, combatting corporate fraud is a must for every business but not optional.

So it’s imperative to take proactive steps to prevent and mitigate the effects of the fraudulent activity. The presence of anti-fraud regulations help reduce both the duration and monetary losses resulting from fraud schemes but not enough. Reducing the duration of fraud is particularly critical since the longer the fraud lasts, the more financial damage it causes the organization. Therefore rapid reactive fraud investigation capabilities are important for business.  

 

Combatting Corporate Fraud Risk: 

Senior management and corporate boards are ultimately responsible for the effectiveness of internal control structure and fraud risk management. Management should continue to maintain high integrity and set the tone for the organization to remind employees that the company’s core values and policies, including fraud monitoring.

 

Here are some points of action that management and boards should lead:

  1. Maintain effective corporate governance and periodically communicate key governance activities to employees.  Governance activities could include audit committee meetings to review internal controls, including interactions with external and internal auditors.
  2. Maintain strong employment background checks, training and retaining clear policies and procedures.
  3. Maintain and promote strong anti-fraud controls, including internal control risk assessments, fraud risk assessments, and an incident hotline. The tips continue to be the primary method of fraud detection in 42 percent of incidents. When organizations identify violations, they should communicate to employees the nature of the incidents and the related disciplinary decisions and actions.
  4. Perform monitoring activities, including internal control reviews, internal audits, and segregation of duties reviews.
  5. Actively involve internal control and anti-fraud professionals (i.e. planning, strategy integration meetings and discussions). These experts can perform risk assessments and identify leading indicators of weakening controls. They also can provide advice on remediation. Their involvement sends messages to the rest of the management team, and the whole organization overall, that the company continues to adhere to its internal control structure.

 

The following are some of the [ best practices ] that have been shown to be particularly effective at preventing and detecting corporate fraud in companies:

  • Establishing an anti-fraud hotline
  • Adopting an anti-fraud policy and code of conduct
  • Instituting management review procedures and fraud training for employees, managers, and executives
  • Conducting surprise audits
  • Conducting external audits of internal controls used in financial reporting
  • Employment Background Check practice to know who is who is who

 

Please consult with our Prosecure™ Anti-fraud Team for guidance on the controls and internal investigative solutions that will be most effective for your business.

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