Webinar series from FraudResourceNet LLC on Preventing and Detecting Fraud in a High Crime Climate. Recordings of these Webinars are available for purchase from our Website fraudresourcenet.com This Webinar focused on the subject in the title FraudResourceNet (FRN) is the only searchable portal of practical, expert fraud prevention, detection and audit information on the Web. FRN combines the high quality, authoritative anti-fraud and audit content from the leading providers, AuditNet ® LLC and White-Collar Crime 101 LLC/FraudAware.
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Introduction: Fraud Statistics: The Growing Fraud Threat
Auditing for Fraud: Standards & Essentials Ethics policy vs. Fraud policy Components of a fraud policy Pros & Cons of a fraud policy Creation and ownership – best practices “Behind the scenes” – making the policy work Traps to avoid Embedding the policy in the corporate DNA Your Questions Conclusion
According to major accounting firms, professional fraud examiners and law enforcement:
Fraud jumps significantly during tough economic times
Business losses due to fraud increased 20% in last 12 months, from $1.4 million to $1.7 million per billion dollars of sales. (Kroll 2010/2011 Global Fraud Report)
Average cost to for each incident of fraud is $160,000 (ACFE) Of Financial Statement fraud: $2 million
Approx. 60% of corporate fraud committed by insiders (PwC)
Approx. 50% of employees who commit fraud have been with their employers for over 5 years (ACFE)
Fraud, ethics and code of conduct are often used interchangeably – not always correct to do so
Ethics policy is a set of principles of conduct within an organization - guide “day to day” decision making and behavior. It serves as the “moral compass” for the organization
A fraud policy has a much narrower focus. It addresses fraudulent conduct by employees and third parties
Creating a stand alone fraud policy shines a much needed light on fraud prevention
Strike the right tone – Fraud policy is designed to protect the company and its employees. Avoid treating all employees as “guilty until proven innocent”
Make sure everyone is on board – Fully address concerns raised by senior executives early in the process
Don’t forget foreign operations – If your company operates overseas, make sure that the policy is legally applicable
Practice what you preach – Departures from policy should be few and far between. If too prescriptive, leave it out
“Out of sight, out of mind” – Don’t create then ignore the policy
Include the fraud policy as a separate section within the code of conduct or ethics policy. Cross-reference where appropriate
Include discussion of the fraud policy/code of conduct during new hire orientation
Once a year, require mandatory training on the code of conduct (online or face to face). Training should include a final exam that includes scenarios to test the employee’s application of the code
Include a “signed” affirmation of the employee’s participation in the course as well as their final exam within their personnel file (an actual or electronic signature is appropriate)