Complacency is the biggest contributor to the problem of fraud risk. Nowadays accounting controls are put in place by most businesses over their finances in an attempt to prevent problems. These will typically be passwords for computers, reconciliations of various numerical processes and supervision of financial and other business activities.
However, these accounting controls themselves will not prevent fraud. They are essential and will reduce the risk of fraud somewhat, but as a sole fraud prevention tool they are inadequate. The cunning criminal can get round any accounting control if not monitored, by searching for its inevitable weaknesses. But consider this - they are going to look for such a weakness if they think nobody is really bothering about the problem of fraud. If the fraudster thinks the only adversary is the defensive line of accounting controls, he can plot and scheme until he finds a way round them. This happens by producing forged paperwork, knowledge that errors are never checked or colluding with other like minded dishonest staff.
If on the other hand there is someone looking over his shoulder, asking the question "is there any fraud going on?" the fraudster will be less likely to begin to commit fraud. This does not mean that your business has to be oppressive, with the fraud prevention police strutting around your factory or offices! It means that the whole workforce must become fraud aware, possess a culture that appreciates that fraud is a problem and could affect their jobs and future security. One of the best ways of achieving this is through the fraud review.
A fraud review is often called an audit, but unlike the statutory compliance visits by the auditors it is a more focused, expert and simplified process that can vastly reduce the risk of fraud. If you have an internal audit function already, this can be employed to carry out fraud reviews. With a little specialised training it is possible to divert part of their resources to better effect thus costing little or nothing to introduce. Therefore, other than initial training of your workers, running an efective fraud awareness program can cost very little but stands to save you potentially massive sums - it may even save you from corporate failure due to major fraud! It may also reduce the level of petty theft and other loss such as exaggerated expense claims and the "borrowing" of company resources such as stationery.
It is extremely easy to introduce a fraud review process. An anti-fraud professional will take time to understandt the processes taking place in your business. This will take place in the head office of the parent organisation and likely take around one to two days. At the end of this time, depending on whether the fraud review is to be outsourced or in house audit skills are to be employed, the fraud expert will present a fraud awareness training course to staff. The service package puts in place an overall policy for fraud, improving the culture of awareness and building an ever strengthening barrier against fraud that then business must maintain. If an entity's own resources are not utilised, and expert fraud practitioner might want to visit various subsidiaries and divisions of a business, which are often more risky due to their remoteness from the parent.
The fraud review process is essential to any businesses' health and its scale need only be proportionate to that of the business it is trying to protect. However much time and effort put in to the defence of fraud, it is the senior managers' obligation to its stakeholders to achieve suitable protection. The fraud review is an essential part of the internal control process and needs to be included along with an appropriate anti-fraud policy and culture within any organisation.
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Mark Jenner is a fraud accountant who specialises in forensic accountancy, fraud investigation and expert accounting witness cases. He is a Fellow of the Institute of Chartered Accountants, a Member of the Expert Witness Institute, a Certified Fraud Examiner and has a Masters Degree in Fraud Management. His website can be found at =>
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Benefits are people like CPA's with cpa continuing education, the public and other people involved in such can have a basic knowledge in determining possible signs of fraud activities and may have a higher chance of avoiding it.
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