The risk of fraud is present in almost every business regardless of size, shape, and complexity. The risk could materialize itself in an employee, a vendor, a client, or in the boardroom. It could be “detrimental” by bleeding company assets or “beneficial” by artificially inflating company financial statements. These frauds could play out in scenarios that are quite varied, and be concealed by strategies that are sophisticated and complex. This combination is making it far more challenging to prevent fraud and catch a perpetrator.
While certain frauds might not be material from an overall financial perspective, others can create significant financial statement errors and, any fraud that occurs will have an adverse impact on profit margins, requiring additional revenue to make up for the loss. Fraud also carries with it significant reputational risk.
So, fraud risk is undeniable in business. However, it doesn’t mean that fraud occurs in every business nor does it imply that the risk is significant in every business. Just simply that the risk is present, should not be ignored and strategies need to be employed to enhance prevention, detection, and deterrence.
Many companies evaluate business risk on a regular basis and develop strategies, create systems, and employ people to monitor or manage the significant risks. Obviously there is a cost to the risk management process both direct in the form of systems and employees and indirect in the form of time. Most of us would agree that risk in all its forms is a cost of doing business.
“Fraud is a direct result of not applying the business and audit basics - internal controls, coupled with regular audits to those controls. A contributing factor, when
fraud is present, overwhelmingly is lack of "tone at the top".
Tisa offers a range of solutions to detect, monitor and prevent corporate fraud. We check your internal financial controls and code of conduct, to ensure controls are adequate, and any misconduct is investigated and penalized.
To protect itself and its stakeholders effectively and efficiently from fraud, we assist our clients to understand fraud risk and specific risks that directly or indirectly apply to the organisation. An effective fraud risk identification process includes an assessment of the incentives, pressures and opportunities to commit fraud. Fraud risk assessments consider the potential override of controls by management as well as areas where controls are weak or there is a lack of segregation of duties.
The confidence placed on the ability of Internal Auditors to identify fraud is very interesting. While some internal auditors are excellent fraud auditors, internal auditing and fraud auditing require different skill sets. Basically, internal auditing is the investigation of internal control effectiveness; whereas, the application of audit procedures in a manner to increase the propensity of detecting fraudulent transactions and the identification of strategies to circumvent internal controls or exploit internal control weaknesses. In order for an Internal Audit plan to identify fraud, the internal auditor must have the experience, knowledge, and methodology to locate and recognize fraudulent transactions.
There are 3 general strategies for preventing, detecting, and deterring fraud.
- Passive – Reliance is placed on internal controls to prevent, detect and deter fraud Reactive – Reliance is placed on investigation after fraud occurs
- Proactive – Reliance is placed on tools and methods to routinely search for fraud indicators How We Can Help DETECTION
Tisa will work with your internal teams to carry out fraud detection checks company-wide or in specific high risks areas such as:
- Marketing, procurement and logistics
- Building construction and maintenance
- Accounts receivable, payable and money laundering compliance
- Advertising, sales, promotions and sponsorships
While it is important to have a plan to prevent, detect, and deter fraud, it is essential to have the skills to locate fraud or locate the “red flags” of fraud. Locating fraud “red flags” is part intuition such as sensing when something just doesn’t look right, and part science, knowing the fraud schemes/scenarios and understanding which concealment strategies could be at play and when they are being used. Many have the intuitive capability to know when something doesn’t pass the “sniff test” but few have the training in the science.
We will also mentor Internal Audit teams to establish routine fraud detection reporting in SAP and other accounting processes. In this way you can limit your losses and make recoveries.
Tisa delivers process and support to detect existing and future losses. INVESTIGATION
When fraud is found or suspected, Tisa has well-established systems to monitor activity and gather evidence. Our fraud investigations team will work with your internal and legal teams to establish the facts in even the most difficult and complex cases. PREVENTION
Tisa also works with organizations to create and maintain a culture of corporate compliance and responsibility, setting the tone from the top. We assist Human Resources with policies and processes that help to enforce workforce compliance, including:
- Pre-employment screening
- Incentive and training programs
- Ethics Reporting Systems
- Exit interviews
- Investigatory and termination procedures
We will also help you to optimize internal resources, and create or update your Employee Code of Conduct, Anti-Fraud Policies, contingency plans and procedures to ensure that internal investigations are effective and comply with applicable legislation in every relevant jurisdiction.
Our work utilizes a unique hands-on strategic approach, devised by case managers with direct investigative experience. We consistently call on companies to be fully transparent and compliant, in order to minimize the risk of financial loss resulting from fraudulent activities.
“There will always be "bad apples" in the ranks whether hired in or "developed" after hire. Good controls still keep honest people honest and identifying and prosecuting offenders still send the right message and prevents other companies from being harmed by the same individual. In many respects these fraud and fraud-related costs are part of doing business. However, beyond this there is the more concerning level of fraud which is that committed at the Board and Executive level. This should not be a cost of doing business.”