Fraud Basics

Best Practice Series2011

Know Fraud

The intentional misrepresentation of facts that causes victims to lose money or property or is simply ‘Use of deceit to secure unlawful gain’

causing 5% loss of Corporate Revenues-ACFE 2010 Report

Occupational Fraud – Fraud committed in the course of one’s occupation.

White-collar Crime – A variety of nonviolent crimes committed in commercial settings for personal financial gain.

Benefit is may be monetary or material benefits, and may be tangible or intangible, including the unauthorised provision of access to or disclosure of information. A benefit may also be obtained by a third party rather than, or in addition to, the perpetrator of the fraud

Break the Triangle

Opportunity

Pressure/Incentive Rationalization

Is your operating environment ripe

for fraud?

Elements of the Perfect Fraud Storm?

Source of Fraud Risk Fraud within (internal fraud) i.e. from its employees or contractors \

Or Intruders (External fraud) i.e. from external parties, such as clients, service providers or

other members of public

The Hybrid ‘Most adverse Fraud Risk’- Complex fraud involving collusion between employees and external parties which may also constitute corrupt conduct and can include instances where an employee or group of employees

Fraud Causation

How to Limit Fraud Cost Effectively 10 key things in the to do list

1 Introduce ongoing anti-fraud training to all employees

2 Effective fraud reporting mechanism 3 Increase employees’ perception of Fraud detection 4 Set right tone at the top one ( honesty and integrity)5 Undertake Proactive fraud risk assessments

performed 6 Embed strong anti-fraud controls 7 Enusre Indipendency of Anti-Fraud team 8 Institute Health recruitment programme9 Operate employee support programs 10 Apply open-door policy and Regellary assess

employee morale

Preventing Fraud Duty for all

Only the Healthy and Strong can win the race

Only the FIT and healthy entity can be assured of sustainable success in the long term

It is our (all of us) call of Duty to prevent Fraud and Corruption knowing that shareholder and employees are all stakeholders- We all eat from the same vine. We must take good care of it.

Thank You

Patrick Gitau-CFE