Strengthening Anti-fraud and Anti-corruption programs by Guest Blogger Carolyn Newman

While public companies and those with international operations have regulatory concerns to help justify strong anti-fraud and anti-corruption programs, the main reason to focus on them and to demonstrate compliance is for the good of the organization. Does everyone in the organization know what fraud schemes are most common in their industry and how to recognize them? When a fraud or other act of noncompliance occurs, the final impact will depend on management’s reaction and handling of the matter. Therefore, anti-fraud and anti-corruption programs must outline consequences and management must stick to them. Since the devil is always in the details, any program that does not include tools for proactively looking for exposures and opportunities for fraud to occur is incomplete.

Two activities are most effective:
1. Proactive responses to tips
2. Data analytics capabilities to continuously test for errors, anomalies and possible fraud

Through effective analytics, you can answer questions that might help you head off potential fraud or corruption, or identify regulatory risks or even improve processes for more timely and accurate financial and operating information such as:

Who are my highest bonus or commissions earners and what might they be doing to game the system?
Are travel and entertainment polices being followed and where are the potential risks of expense reimbursements abuse?
Are there abuses in my P-card program that are creating a culture of noncompliance?
What instances of lapses in segregation of duties might be occurring that are creating losses?
How can I ensure the quality of data and the accuracy of my transaction monitoring for AML?
How can I speed up the reconciliation process to find errors more quickly?

The designed tests can then fuel automated monitoring capabilities to continually improve the detection of fraud with a goal of either preventing instances or minimizing their effects. It sends the message to all potential fraudsters: we’re watching and we will take action on identified fraud. Effective anti-fraud and anti-corruption programs are a key part of a good internal controls system. And that’s good for businesses everywhere.

carolynnewman

Carolyn Newman, CPA, CISA, brings more than 25 years of experience in public accounting, auditing and consulting to her role as President of Audimation Services. As a computer auditor, Carolyn directly experienced how computer assisted audit techniques (CAATs) increased the efficiency and effectiveness of audits. In 1992, she co-founded Audimation to help financial professionals use technology to benefit themselves and their organizations. Prior to that, Carolyn served as regional technical director of computer auditing with BDO Seidman.
She is a frequent speaker on the subjects of computer assisted audit techniques and successful information technology implementations.

Carolyn holds a Bachelor of Arts degree from Texas Lutheran University, and a Master of Accountancy from the University of Houston. . She is a member of the AICPA, Texas Society of CPAs (serving as Vice Chair of the Houston Chapter’s Business and Industry Committee), Information Systems Audit & Control Association (ISACA), The Institute of Internal Auditors, The Institute of Management Accountants (past VP of Education) and serves on the Executive Advisory Committee of Texas Lutheran University’s Business School.

 

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