Fraud Prevention Strategy: The 5 Simple Steps
Fraud prevention strategy is one of the key policies that can aid an organisation in safeguarding itself against reprimands of the matter. One of the greatest encounters a fraud auditor can confront is the mission of persuading management that the peril of fraud is in existence across all aspects of corporate culture – regardless of whether it is from internal factors or external factors. Sadly, fraud cannot ever be eradicated from the corporation as collusion is adept in continually conquering routine organisational regulations.
What is the strategy?
The objective of a Fraud Prevention Strategy is to identify a high-level proposal on how an organisation should go about implementing its fraud prevention policy in the presence of its internal and external influences. The strategy forms the most important part of the fraud deterrence strategy thus the policy an organisation chooses to implement must be necessitated be straightforward and pragmatic.
Combatting fraud requires a distinct and refreshing methodology that entails including all three facets of the fraud cycle:
- Fraud deterrence and prevention
- Fraud detection
- Fraud investigation
Preferably, with the fraud cycle in mind, every enterprise ought to put together a distinctly specified fraud prevention strategy that integrates the following:
- Determine the proper culture with the proposed policy: having protocols and policies in place for dealing with fraud will help you establish a good grounding for identifying it.
- Counteract and detect: To detect fraud, you need to have effective systems and processes in place covering all aspects of your business.
- Investigation of any occurrences in which fraud occurs.
- Review and monitor policies and occasions in which fraud has transpired regularly to make certain that fraud levels stay below the goal amount.
- Learn from previous occurrences and update training procedures.
- Risk management covers all types of risk from corporate and social responsibility compliance to performance measurement.
What should be established in a fraud prevention strategy:
- Whistleblowing is the act of exposing information about misconduct in the workplace and is a crucial element in any prevention strategy. When whistle-blower hotlines are implemented and sustained correctly, they can aid in substantially decreasing an organisation’s exposure to fraud by permitting for prior detection and thus savings in the form of reduced fraud losses from the prior detection.
Identify the risks:
- The risk of fraud is not solely based on an employee’s background but also a myriad of other factors. Most notably, it is important to be able to identify risks by nature of items (some examples include size and value, ease of resale and cash), nature of the control environment (including separation of duties, safeguards, complexity, turnover and related party transactions) and pressures ( i.e., level of dissatisfaction – if the workforce is unhappy with the company, they will be more inclined to engage in fraud, expectations and guarantees). Identifying these risks is the first step in being able to figure out how to counteract them thus preventing fraud.
Implement effective controls:
When it comes to implementation, organisations need to ensure that they complete the action plan and then refer it to an appropriate person – in most instances this is from HR and other figures in leadership to management of employees. It is then up to the subordinates to assist them with implementing the strategy, reviewing the strategy, or delegating it to the employees.
Most policies implement:
- Making employees aware of emergency procedures
- Making employees aware of the location of first aid stations
- Educating employees on the location and obvious danger and workplace hazards
- Examine health and safety workplace responsibilities; wear the necessary protective clothing or equipment participate and have input to management report incidents or mishaps as considered essential by management
Increase awareness of the risks:
It must not be presumed that staff members have an innate perception of the risks of fraud, or that they have any understanding of the scope of risks that encircle them. This means that it is incredibly important to stimulate a risk-conscious culture within an organisation.
Some examples of methods to increase such awareness include:
- Performing risk audits and engaging as many individuals as possible in the organisation in the risk auditing procedure
- Benchmarking – studying “best practices” from other organisations that have executed risk management.
- Sending organisation personnel to attend industry seminars on fraud prevention as well as risk management
Plan for the worst:
- It might sound pessimistic, but it is always best to prepare yourself and your employees for the worst-case scenario. As hard as we try to minimize fraud, it cannot unfortunately be fully eradicated. If it appears too good to be true, it most likely is. It is good practice to meticulously probe all, agreements, prospects, transactions, data and documents.
Crucial components that a proper fraud prevention strategy accomplishes:
It is easy to infer that fraud can leak into all aspects of corporate culture and can destroy an organisation from within. Despite this issue, several organisations opt not to implement a fraud prevention strategy – it is primarily implied that this is ascribed to the absence of knowledge circulating on the benefits of such a strategy. However, the rewards reaped from this type of policy is beneficial to corporations eventually and can reap rewards such as:
- Lower consequential loss pertaining to fraud
- Lesser/no legal and investigative costs relating to fraud
- Lesser/no regulatory fines paid in the occurrence of fraud
- Better time management can be used to enrich employees’ knowledge and experience at the organisation.
- Reduced insurance premiums
- Lower turnover of key staff and customers
- The lessened cost of/capability to increase new finance
Overall, the process of preventing fraud can be an extensive one but one that’s benefits outweighs the onerous course. If you still have any questions surrounding fraud prevention, why not contact CRI? Our experts have years of experience and have been trained to provide your business with bespoke advice fit for your organisations’ needs. Don’t hesitate, prevent fraud in your workplace today.
Who is 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 Management, Employee Background Screening, Business Intelligence, Due Diligence 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 Systems, ISO 37301:2021 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.