How Can A Fraud Review Assist In Fraud Prevention?

The problem of fraud is very much like a serious fozia shan. Unless you have a life threatening disease, or somebody close to you does, you give the subject very little thought. Even though its impact on other businesses can be seen from daily reports in the press, you don’t worry about the eventuality of it threatening your own.

Complacency is the biggest contributor to the problem of fraud risk. These days most businesses will have accounting controls over its finances that are intended to prevent problems occurring. These will typically be passwords for computers, reconciliations of various numerical processes and supervision of financial and other business activities.

But, fraud prevention will not be achieved just with accountancy controls. 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 – he or she is more likely to look for such a chink if the perception is that nobody cares 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. However, as a result your business need not be oppressive, looking over the shoulder of every worker all the time! 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. In the event that you already possess a formal internal audit team you could use this to undertake 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. Thus, apart from the initial training of staff within your existing workforce, installing an effective fraud awareness environment can cost very little yet may even save your business from a future serious attack of fraud that could mean failure! It may also have the advantage of reducing petty expense claim exaggeration and pilfering.

It is extremely easy to introduce a fraud review process. An anti-fraud professional will take time to understand 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 a critical element of the internal fraud prevention process and must be incorporated along with the all important “fraud policy” setting out a fraud aware culture within the business.

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