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Antifraud-360 degrees.

Fraud- taking possession of another’s property by means of deception, by misleading another person for personal gain.

A fraudster is a person who commits unlawful actions.

Human nature suggests that he tends to do what is easy and wrong, instead of what is hard and right. It’s all the fault of such human vice as laziness;

For instance, in a situation in which a top manager, that has reached a certain age, has not been able to become financially sustainable and thereby ensure himself an appropriate level of income, wants to receive material benefits, that he cannot afford: an expensive car, an luxurious apartment, travel, top level restaurants, etc. Such a situation of mismatching opportunities and the desired lifestyle, provokes the manager to commit unlawful actions for the purpose of enrichment and meeting the emerging needs.

This is how fraud occurs in the companies.

In this article I would like to touch majority of aspects beginning from internal corporate fraud and profile of a corporate fraudster to the mentioning the cases in which companies fraud occurs more frequently, what triggers the emergence of fraud and which factors indicate the dishonesty of your manager and much more.

So, who steals from companies most typically?

First of all, managers at all levels, top managers and even shareholders;

The world statistics are: the higher the position of a manager, the higher the average material value of the sums, that are misappropriated from the company.

An image of a typical corporate fraudster: usually a man aged 35 to 45 years, occupying the position of a top manager, working in the company for more than 5 years, enjoying authority and reputation in the company, having a significant impact on the proprietor, a single person or a father with many children, has a higher education, sometimes an MBA degree.

In general, people who have worked in the company for a considerable period of time, have a risk and vulnerability map of the company, so that at certain times they can use sensitive information for their own gain.

Among the catalyst triggers, that induce managers to commit unlawful actions, it is worth highlighting:

A weak internal control system, the vulnerabilities of which are exploited by the managers;

Vices: the desire to live beyond means, shopping addiction, alcoholism, drug addiction, etc.;

Life circumstances, like when a family member gets sick and needs an urgent surgery.

The departments of the company that are most exposed to the fraudulent conduct:

Procurement and sales department – risk of corruption schemes;

Accounting and Financial department- risk of concealment or distortion of the company’s real financial performance/understating the company’s financial performance;

Storage facilities – risk of illegal write-off and disposal of stocks;

Production and laboratory- the risk of distortion and forgery of process maps;

Among the indicators, that show the existence of a fraud factor in the company, it is worth mentioning:

  • non-conformity of the manager’s lifestyle and their actual income (life beyond means);
  • - unwillingness to go on vacation and abandon their work perimeter;
  • - alignment of official duties;
  • - a large amount of operations in cash;
  • - lack of company regulations and policies;
  • - absence of detected fraud in the last couple of years;
  • - absence of an external auditor and internal control departments and a number of other factors;
  • - low level of the internal control system;
  • In order to minimize the fraud factor in your company, you need to know about the Forensic tool and its key theses.
  • Forensic is a tool for combating intracorporate fraud, which allows, on the one hand, to build a control system in order to protect your business from fraud, and on the other hand to effectively investigate fraud cases.

Key points of Forensic:

  • forensic is a dish served cold. If you find a fraud, do not rush to report it, just wait for a while and maybe it will lead you to a bigger fraud;
  • - forensic catch- fraud is in every company, and to think that no one steals in your company is very foolish. Theft is in the absolute number of the companies and it is always a question of the materiality of sums, under the principle of a stream or a river;
  • - forensic double catch- when a partner in a business, who is not in the operational control- usually a majority shareholder, decided to check his junior business partner, who is in operational control, for fraud. Both partners rely on the fact, that there are no frauds in the company, but they overlook the fact that managers can steal from them, which the shareholders may not be aware of.
  • - forensic Cinderella – Forensic Ukrainian way is, first of all, the restoration of intentionally. destroyed information, or information that is completely absent. In other words, before carrying out the Forensic procedure in Ukraine, it is necessary, first of all, to restore at times “must-have” information and only then to carry out the procedure.
  • - forensic rule (English-follow the green) – follow the money and keep an eye out at 360 degrees.
  • Resume: forensic tool allows you to keep your finger on the pulse of your company and to provide a permanent helicopter view over it.

Auditor, Fraud investigator Co-Owner, Partner, Forensic services at Crowe Erfolg Site: https://www.crowe.com/ua/croweaa Member ASIS, ACFE, ASCP Board member GS