Ten Early Warning Signs of Fraud in Organizations - Slide 4

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A major indicator can be the act of deletion or pressure on staff to delete, remove or otherwise dump past records following a restructure, a new division launch, a JV or acquisition. An excuse of, “Oh, I’m sorry those files were destroyed” should be cause for alarm. It will be an even bigger problem where international operations are involved as it’s far harder to find or recreate evidence in a foreign territory.

ACTION: Take care to establish and log where paper documents are and when they should and should not be stored. Identify who is in control of the system processes and who is responsible for and has ownership of the records. They are not always the same person of course. Ensure that scanning, and indexing works properly and that no-one can intercept/edit documents. Also ensure that storage capacity is enough and controlled properly. Where acquisitions and mergers are concerned, ensure that all documents are available and stored appropriately and securely, especially those that relate to IP protection, IP development records, audit trails and staff contracts. In particular, if you are acquiring a business make sure that you have indemnities/penalty clauses built into the acquisition agreements that relate to the availability of data, logs, audit trails and so forth.

Anti-fraud consultancy UKFraud.co.uk has published a list of 10 common early warning signs that could alert management that fraud may be occurring in their organization. The list draws upon UKFRAUD.co.uk’s substantial experience across an international client base, ranging from major financial institutions, public sector bodies and corporations to SMEs and non-profit making organizations. The list works on the assumption that whatever tools they use, be it IT-based cons and false accounting or other traditional scams, the warning signs are often the same. As UKFraud.co.uk believes that awareness of the signs and a sound approach to countering them can often deter many opportunistic incidents of fraud, it has published the list to help executives benchmark their own operations. Suggested actions that can be taken to counter the risk of fraud are given following each sign.

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