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Due to our extensive work across various sectors, industries, and markets, we have valuable insights into how clients have historically approached and continue to tackle fraud prevention and investigation.

A fundamental principle in our approach and methodology involves a series of factors that reflect a life cycle across areas of prevention, diagnostics, reactive and remedial work. These areas highlight the importance of undertaking proactive activities to deter, prevent and detect instances of fraud, while also promoting a commitment to the appropriate investigation of allegations and the application of suitable sanctions and redress.

Preventative steps for internal and external fraud

We encourage our clients to invest a “proportionate” amount of time in preventing both internal and external fraud, as well as opportunities for collusion. This is often supported through guidance or instructions shared by professional and regulatory bodies or legislative requirements.

A clear infrastructure and “tone from the top” can contribute to the culture in place and establish expected levels of conduct.

Education is a key element of the life cycle and seeks to increase the levels of understanding of what fraud and bribery are and how they may present themselves in day-to-day work.

Many of our clients seek to invest in the education and training element of the life cycle as an initial foundation to understand the current level of knowledge in their workplace. They often invest in this area following the introduction of industry regulatory requirements or legislation that requires them to focus on their counter fraud/bribery agenda and understanding. By doing so, they ensure that their employees are equipped with the necessary education to identify and mitigate potential fraud risks.

In support of any training and education, it’s vital that the organisation has established policies and procedures that are not only legislatively sound and reflect the organisation’s commitment to countering associated fraud and bribery risks, but are also effectively complied with.

Fraud risk assessment

To determine what a “proportionate” investment in countering fraud and bribery is, it is essential to have an effective understanding and insight into your organisation’s fraud and bribery risk exposure. A fraud and bribery risk assessment evaluates your risk profile and vulnerability to some of the most common fraud and bribery threats within the sector. By identifying areas of risk, it enables you to examine existing mitigating controls, sources of assurance, and potential control gaps that may need to be addressed.

Key areas of risk vary across organisations. However, some of the common themes we identify from our proactive and reactive investigation work include:

• Governance: fraud risk management, conflicts of interest and gifts and hospitality.
• Procurement and contracts: tendering, single tender waivers and approved suppliers.
• IT strategy: cyber fraud awareness and email scams.
• Finance: invoicing and mandate fraud.
• Human resources and recruitment: pre-employment checks, working while off sick and staff turnover.
• Payroll: timesheets, expenses, ghost employees, salary payment diversions and overpayments.

Once you have completed a risk assessment, we recommend incorporating the outcomes into your counter fraud and bribery strategy. This will provide clarity in your approach to overseeing, mitigating, and managing the identified risks. Your strategy can outline key proactive activities and plans, such as targeted reviews, testing, and other forms of assurance across risk areas.

Investigations, sanctions and redress of fraud and bribery

Despite investments in the proactive areas of deterrence, prevention and detection of fraud and bribery, allegations and subsequent investigations into suspicions of fraud and bribery can and do arise.

It’s fundamental that you have a suitable response plan in place, along with policies and processes that promote a robust, consistent and fair investigation process, including access to suitable legal advice and independent investigators, if necessary.

Having a zero-tolerance approach to fraud and bribery promotes a commitment to applying appropriate sanctions and redress where instances of fraud and bribery are identified. Effective application of such sanctions and redress can also serve as a deterrent to those contemplating acts of fraud or bribery.

How to minimise fraud risk exposure – key tasks

Understanding that any investment in preventing fraud and bribery should be proportionate to the level of potential risk exposure, we have highlighted some key tasks to consider when assessing and determining the level of investment:

• Risk assessments: identify where your organisation is potentially exposed to fraud risk and whether there are effective controls in place to mitigate any identified risks.
• Top-level commitment: set a strategy, implement effective policies, make resources available and commit to zero-tolerance and consequences for breaches.
• Due diligence: assess your suppliers, customers and partners, conduct strong pre-employment checks and ensure contractual obligations are met.
• Communication: raise awareness of new legislation, train key departments and highlight the available reporting routes, such as whistleblowing.
• Monitoring and review: take action when needed, provide feedback to staff and undertake a lessons learned process.

To find out more about any of the topics discussed above, please contact Andrea Deegan.