IDENTIFYING & MITIGATING FRAUD RISKS in a Remote Working Environment BY ROBERT SPRAGUE While the direct financial impact on organizations and the personal financial impact on employees is obvious, a large percentage of companies have had to adjust to a workforce that has migrated to a remote working environment. As the challenges of operating a remote workforce are great, companies must also ensure that assets are protected from fraudsters seeking to take advantage of potential weakened internal control structures caused by a remote workforce. AN ENVIRONMENT RIPE FOR FRAUD Significant economic turmoil is often the trigger for growth in financial fraud. No industry, including construction, is immune to this reality. Shortly after the COVID-19 crisis began, Bruce Dorris, President and CEO of the Association of Certified Fraud Examiners (ACFE), penned “Coronavirus Pandemic Is a Perfect Storm for Fraud,” where he pre- dicts that economic disruption caused by COVID-19 will lead to an increase in fraud. 1 History has shown that major eco- nomic disruption is generally followed by a rash of financial frauds coming to light (e.g., during the economic recovery following the Great Recession), as busi- nesses emerge from the disorder and operations begin to return to a steady state. 2 To understand why this occurs, it is helpful to be familiar with the environ- mental factors that cause an individual to commit fraud. The Fraud Triangle, developed by noted criminologist Donald Cressey several decades ago, explains these factors (Exhibit 1). The effects of the COVID-19 pandemic on business operations have been devastating and far reaching. Companies have been forced to lay off thousands of employees, furlough others for an indefinite period of time, freeze compensation, and cut pay. There is great uncertainty on when things will return to normal – and what that will even look like. planning for a [ [ REMOTE REMOTE] ] FUTURE CFMA Copyright © 2021 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in CFMA Building Profits (a member-only benefit) and is reprinted with permission. CFMA Building Profits January/February 2021
DENTIFYING & MITIGATING FRAUD RISKS in a Remote Working Environment
Jul 06, 2023
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