Budget cuts and reorganizations raise the pressure for individuals to meet performance targets the risk of fraud increases.

 Steps firms can take to help curtail corporate fraud:

1.     Know who you hire. Contact references and verify the education of potential hires. Conduct criminal and financial background checks on those being considered for financially sensitive positions.

 2.     Take away temptation. Perform regular ethical and social hacking to ensure Internet access and systems controls are secure.

 3.     Keep staff informed. Annual organization-wide ethics training delivers a consistent message. A strong ethical environment encourages self-policing.

 4.     Establish detection mechanisms. A combination of internal audits, surprise audits and senior management reviews will ensure the right questions are being asked at every level. This over-sight should extend to remote locations.

 Implement checks and balances. While most fraud occurs in non-management ranks, fraud by executives is often more costly. Create an advisory committee to provide oversight at all levels.

 Set up an anonymous hotline to report fraud. When a call comes in, act quickly to confirm its validity.

 Take action. If fraud is detected, implement a rapid-response plan for investigating, reporting and prosecuting misconduct, fraud or corruption. Follow-up procedures ensure questionable behaviour is not overlooked. Then put controls in place to prevent this type of fraud from happening again.

 Discussion Questions:

1. Why is fraud more prevalent in poor economic times?
2. Know who you hire; why is this preventive control so important?
3. Do you feel that applying all the above controls, will prevent fraud?

To read more: visit the October issue of  CA magagine