Fraud risk management and fraud prevention

Minimising regulatory enquiries, fraud and business disputes through carefully planned preventive measures is far more cost-effective than remediation.  

PricewaterhouseCoopers' Economic Crime Survey 2009 found that while internal audit remains key to the detection of fraud, there is a clear trend in recent surveys - internal audit is consistently detecting less of the frauds reported.  Anti-fraud controls, especially risk management, were reported having detected more frauds in our current survey.  Thus the combination of an anti-fraud culture and effective anti-fraud controls, as we recommended in our 2007 survey report, appears to be improving the detection of economic crime.

Globally, 7% of frauds were detected through formal whistle-blowing procedures.  This may suggest either the ineffectiveness or the absence due to a lack of support within organisations, insufficient publicity and/or leadership not being seen to take whistle-blowing seriously. 

Detection methods

We can help organisations review their fraud policies and procedures to ensure they effectively reduce risk, improve process, and are in compliance with prevailing laws and regulations.  This involves identifying the company's specific fraud risks and then developing and implementing controls, procedures and operational changes to mitigate these risks.  This will involve some or all of the components set out below:

Schematic of our fraud risk management process

Companies not only face fraud risks from within, but also when entering into business relationships with new parties, investing in capital projects, or when acquiring another existing business entity, in particular those operating in different jurisdictions where local regulations may not be as explicit or tangible.

Our pro-active services are designed for responsible and progressive organisations that decide to conduct pro-active Fraud Risk Assessments to assess and manage such risks before problems surface.  We can review proposed acquisition targets, subcontractors and agents to test for compliance issues or risks in accordance with SOX 404, FCPA and other anti-bribery legislation.