COMPANIES should consider fraud risk as an integral part of an overall corporate risk management strategy, the associate director of Fraud Investigation and Dispute Services, Jesman Howera, said during an Ernst & Young breakfast meeting held earlier this week.
Report by Staff Writer
Howera, who was making a presentation on managing fraud risk, said all businesses were vulnerable to fraud even though it was preventable. However, the prevention lay with top management, she said.
There was need to set the proper tone at the top and create a culture of integrity in which there was mutual trust among employees and management to do the right things, the right way, she said.
This culture could be fostered in a code of ethics, fraud prevention policies, and fraud awareness training.
“Companies can introduce a fraud education, training and awareness programme, which all employees should be familiar with. This programme ensures that all levels of employees are familiar with the general risk of fraud,” Howera said.
She said companies should be able to identify, prevent, deter, disrupt, detect, investigate and resolve all (potential) cases of fraud. “A good fraud risk management strategy will help to identify high-risk activities and weaknesses in the control environment,” she said.
Howera highlighted that an organisation should develop an ethics policy, which would help in emphasising the expected norms and values employees should follow. Companies should also develop a fraud and whistle blowers’ policy.
She encouraged companies to acquire technology, which has the capability to identify fraud when it is taking place. “Fraud is detectable and technology is one of the tools that can be used to detect it,” Howera said.
According to a survey by Ernst & Young’s Fraud Investigation and Dispute Services (FIDS), the majority of Africans are of the notion that corruption and bribery in business are widespread in their countries, and are killing their businesses. FIDS director for Africa, Charles de Chermont said 67% of Africans are of the opinion that corruption and bribery were a common phenomenon in business in their countries.
“Our researchers conducted a total of 1 758 interviews with employees in 43 countries covering North America, Latin America, Europe, Africa, Middle East, Far East and Oceania. Whilst in Africa 125 interviews were held in four countries Kenya, Namibia, Nigeria, and South Africa,” said Chermont.