The Fraud Threat
The threat of fraud to you and your organisation is real and should be treated seriously. Fraudsters will not care who, what or where you are if they are intent on obtaining ill-gotten gains from you.
The Baldwins Forensic Accountancy team specialise in assisting organisations deal with the threat of fraud from being proactive, for example assisting with processes and fraud prevention to being reactive, for example undertaking an investigation and everything in between and after, for example recommendations to improve processes following a fraud.
Fraud – The Problem
The true value of fraud in the UK is unknown, with many studies attempting to quantify this. The value of detected fraud in the UK was estimated at £2.11 billion in 2017. This is considered the tip of the iceberg with the total value of fraud, detected and undetected, being estimated at £190 billion in 2017.
The Fight Against Fraud
We consider the fight against fraud as four key stages and Baldwins’ Forensic Accountants can assist in all of these:
- Prevention: A prevention strategy is a proactive solution which is intended to help an organisation prevent fraud. Our recommended approach is to consider the areas of risk to your organisation, but policies in place to mitigate those risks, test the robustness of those processes and revisit the processes if risks still exist. Although this may be money spent upfront, being proactive is less costly than being reactive (as commented upon below).
- Detection: A detection strategy can assist in stopping a fraud before it grows or even stopping it before it starts. The best detection strategy is having staff who are aware of the fraud risks, how to spot it and know what to do if they do spot it. An organisation’s staff are its eyes and ears and ensuring that staff are aware of the fraud risk is vital. We can assist organisations in training staff and making them fraud aware.
Further, we encourage whistleblowing policies to be put in place and can help devise whistleblowing plans and train staff and organisations on effective whistleblowing. Further, we consider that you can use your own data to identify anomalies that may indicate fraud, for example, duplicate payments, the change of supplier bank account details and conflict of interest reviews.
- Investigation: An investigation strategy is a reactive one and can become a costly one as not only has an organisation potentially suffered a loss, management time will be taken up impacting their effective running of the business and there are the costs associated with appointing specialists.
We at Baldwins realise this and ensure any investigation we undertake is done with costs in mind and seek to find the most cost-effective strategy. An investigation should only ever be undertaken by people with specialist knowledge and we can assist in upskilling organisations with the basics in this. We often work hand in hand with our clients on investigations whilst taking the the overall lead. Further, we can help recommend legal advisors who have trusted relationships with if the matter needs legal advice. Likewise, we have worked with computer forensic firms (who can image computers and copy electronic data) and specialists who can identify if any individuals have assets to recover losses against.
- Remediation: Once an investigation is underway it is important to try and prevent the issue occurring again and we are used to providing organisations with the tools to assist in that process.
For all four stages of the process we can provide training and presentations to assist an organisation in the fight against fraud.
Current Fraud Issues
We set out below some current trends we have identified in the fight against fraud.
Cybercrime continues to be the fastest growing type of fraud in the world. It knows no boundaries and is not hindered by geographical location or volumes of attempted frauds.
However, the use of technology is an “enabler” of fraud and it often still relies on human error to allow the fraud to take place. By ensuring staff are trained and have a questioning attitude, this may help in the prevention of cybercrime.
The Intelligent fraudster
Fraudsters are seeking more and more interesting ways to ensure their activity cannot no be detected. This includes attending fraud prevention events and reading on counter fraud specialists are seeking to prevent frauds. Make no mistake the fraudster can be a sophisticated individual or group of individuals who make a living off their ill-gotten gains.
We have experienced several procurement fraud cases which could have been prevented if an organisation had spent some time undertaking due diligence reviews on new suppliers. Relying on individuals to sign conflict of interest forms is not enough as the forms will not be completed if a fraud is to take place. If an organisation spent time being proactive, obvious conflicts would have been identified and the new supplier would not have been selected.
The fight against fraud is real. Please do take it seriously. If you have any questions on the above, please do not hesitate to contact us and we will be happy to discuss the issue with you.