Debug fears for fraud prevention

Even though companies understand the fraud risk factor – nearly 77 per cent of HR professionals accept that there is a risk that employees can initiate fraudulent activity because of the work-from-home arrangement during the pandemic – more often than not, companies do not take action to implement robust fraud prevention processes in place until the organisation is exposed to fraud or appear in the news due to an investigation, incident, or external and (or) internal violation. Based on the article by ACFE, we aim to answer why companies wouldn’t adopt fraud prevention and detection measures proactively. 

The answer is fear. It prevents business leaders from being proactive about fighting fraud. Business analytical tools and systems enable companies to identify red flags quickly, but they do not work as fraud prevention tools. 67 per cent of CRI® Group’s background screening survey respondents said they encountered one type of fraud – employee fraud – in their career. It’s alarming to imagine how others have encountered many other types of fraud. And still, companies pay lip service to efforts to fight fraud. So how the fear factor plays into the decision to fight fraud?

Fear of associated expenses

A fraud prevention tool is a cost you don’t always recognise an immediate return. Consider it like health or car insurance – when it comes to identifying and preventing risk and potential fraud, returns can be harder to quantify.

There are some concerns about spending money on a system that might or might not identify fraud. And if the system does identify fraudulent activity, companies are now obligated to spend more for the additional investigation and possible litigation. It might not be a significant expense for some large organisations, but the budget is better reinvested toward a company’s bottom line.

When trying to save their expenses, organisations forget that expense fraud is one of the most common forms of occupational fraud: employees fudging on their expense accounts. Earlier this year, Lookers (A London-listed company) warned investors they might be unable to buy and sell its shares from the beginning of July because of potential fraud on its books – confirming a £19m charge to correct books after fraud inquiry. Whether through fictitious charges, fake receipts or invoices, or other improper use of expense funds, an expense account is sometimes seen as a low-risk, high-reward area for fraud. It shouldn’t be. Follow these five tips for preventing and detecting expensive fraud.

Fear of technology

Based on ACFE, “companies are concerned that implementing new software technology might increase their exposure to fraud via data breaches. They’re also concerned that technology will replace internal auditors. While data encryption and similar tools can combat the risk of data breaches, addressing personnel concerns are trickier.” Technology is meant to assist but not to replace people. It helps identify the red flags, but human input and investigation are required to determine if fraud is occurring and check the facts. 

Appointing a fraud investigator is a good idea in this case. Fraud investigators are the front line of establishing the facts of suspected fraud or other unethical business behaviour. A fraud investigator’s skillset and wide knowledge of fraud laws, evidence gathering, and interviewing make them the go-to expert for investigating insurance fraud, financial fraud, procurement fraud, asset recovery, cyber fraud, healthcare fraud, retail fraud, etc. In this article about fraud investigators’ role, we explore their key functions, responsibilities and knowledge, and how their skillset helps organisations.

Fear of reputation loss

“Companies might fear their reputations will take a hit if they uncover ongoing fraud schemes. Social media has become a prevalent form of information sharing, so all it takes is the hint of a rumour, and the damage is done. Employees might post the information — or alleged information — that makes it appear as though a company is attempting to hide something”, based on ACFE. This comes as the company’s advantage to be open with employees to fight fraud. Employees are less likely to whistleblow in public when they are safe and have internal options to report fraud and discrepancies.

The key ways of managing the company’s reputation are being transparent, protecting data, and conducting due diligence. It may sometimes feel like your company’s reputation is out of your control. However, you can take steps to help manage your reputation and help steer the conversation. It becomes more difficult when you wait and try to undo later the damage that has already been done. That’s why being proactive in maintaining a positive reputation is the best strategy.

Fighting fraud on the front line is key

Companies must realise that the benefits of fighting fraud far outweigh the fears. Engagement in an early fraud education process acts as a buffer, leading to fewer fraudulent losses. Procurement and payables professionals must implement efficient processes that address red flags and track — early and upfront — non-adherence to mandates. Below is a quick overview of best practices for engaging analytic tools and front-line staff to identify and prevent fraud.

  • Tone at the Top: Of course, top-level management must be committed to addressing fraud prevention. However, it’s just as important for middle managers to adopt a zero-tolerance policy toward fraud. A lack of integrity can be contagious. If workers see their supervisors’ rubberstamping processes, it gives them little incentive to raise concerns when they find inconsistencies.
  • Segregation of duties: No one should be responsible for an entire accounting function. The individual who sets up a vendor or client shouldn’t be the same person who approves invoice payments. It’s vital to have multiple eyes on the process, especially in smaller organisations where segregation of accounting duties might be limited or non-existent.
  • Create a fraud-fighting culture: The very perception of detection helps prevent fraud. A fraud-prevention overview should be part of new employee orientation. Companies also should sign off on internal codes of ethics that outline the steps and procedures employees can take if they suspect fraud. Tips are consistently, and by far, the most common detection method. According to the Report to the Nations, tips detected more than 40 per cent of all cases. Publicise a hotline number internally and externally for your vendors — one of your employees might even be seeking to collude with a client!
  • Training and process audit: Perform anti-fraud training for employees annually, at a minimum. Increase your anti-fraud training if you have a substantial number of new employees coming on board. Annual fraud awareness and detection training sends a clear message to employees about your organisation’s high standards and could deter fraudulent activity. Vet suppliers and clients. If you want to avert various fraudulent schemes, you must understand the red flags to look for when onboarding a supplier or client. Vendor vetting in real-time can mitigate upfront risks and dictate those actions required to prevent fraud from slipping undetected through the system. Vendor portals prove invaluable for vetting suppliers using automated data validation.
  • Take action: There’s no reason to identify or perform analysis if you’re unwilling to take action. Fraud prevention software can help you do more than detect fraud — it can highlight poor processes that might expose you to fraud. For example, you might have a legitimate vendor or client, but software can raise a red flag because of gaps in your setup process. Analyse results, make changes, monitor and constantly learn from your processes.

Don’t let fear take control

We must help diminish the fears that impede the fight against fraud. At CRI® Group, we know that we can effectively and together use the needed resources to combat them when you acknowledge those fears. We believe that analytics tools and proactive monitoring can turn idle threats into reality.

Your business is at far greater risk for losses due to fraud than organisations that take advantage of fraud prevention tools to leverage their resources: the larger the organisation, the more complex and multi-faceted the governance and responsibility matrix for fraud detection. Passive detection methods aren’t enough anymore. It’s been proven repeatedly that instilling proactive efforts to discover or reduce fraud will increase the bottom line and enhance a company’s reputation. Our fraud examiners can assist you, don’t allow fear to paralyse you into inaction.

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About CRI® Group

Based in London, CRI® Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk ManagementEmployee Background ScreeningBusiness IntelligenceDue DiligenceCompliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI® Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI® Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management SystemsISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI® Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.


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If you find yourself in an ethical dilemma or suspect inappropriate or illegal conduct, and you feel uncomfortable reporting through normal communication channels or wish to raise the issue anonymously, use CRI® Group’s Compliance Hotline. The Compliance Hotline is a secure and confidential reporting channel managed by an independent provider. When reporting a concern in good faith, you will be protected by CRI® Group’s Non-Retaliation Policy.