The tough business environment currently being experienced in Australia has undoubtedly led to a significant increase in the pressure and incentive to commit fraud and corruption.
Often linked to poor governance, fraud and corruption is a serious risk for any entity. Indications are that dishonesty has an impact way beyond financial loss. Specifically, it undermines operational effectiveness and reliability and can severely damage an organisation’s reputation.
Whilst every Australian entity is vulnerable to fraud and corruption, certain factors increase the risk. These include the size of the business, geographic distribution, diversity of business functions, the impact of both regulatory compliance and technology, along with the risks inherent within the industry sector in which they operate.
The most efficient and cost effective way of managing the risk is proactively – an understanding of fraud and corruption risks that directly or indirectly apply to an entity is a vital first step in establishing an effective risk framework.
The process for conducting a fraud and corruption risk assessment is laid down in Australian Standard 8001 – Fraud & Corruption Control. In order to assess the extent to which your organisation is able to manage such risk, you may wish to consider the following questions:
• Has a Fraud & Corruption Control Plan been developed and actioned?
• Is your fraud and corruption control function adequately resourced?
• Is your Senior Management Team sufficiently knowledgeable and aware of the risks from fraud and corruption?
• Are high risk business processes subjected to a rigorous system of internal controls?
• To what extent does positive verification of employees, contractors, suppliers and customers take place?
• Have you implemented systems aimed at detecting fraud and corruption as soon as possible after it has occurred?
• Do you have adequate means for employees and third parties to report suspicious conduct and concerns?
• Do adequate fraud and corruption policies and procedures exist?
• Do you have access to a qualified investigation resource, able to manage identified cases?
• Has a programme been developed to capture, report, analyse and escalate all detected fraud and corruption incidents?
• Do clear and relevant HR guidelines exist?
• Does a review of internal controls always occur following the detection of an incident, or in conjunction with an annual audit?
Whilst exposure to fraud and corruption can never be totally eradicated, proactive assessment and management of fraud & corruption will help minimise your exposure. Expert consultation can act to prevent substantial loss, if sought early.