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GRC Professional : GRC Autumn 2012
11 according to its Fraud Barometer, which was released in late March. “When the GFC started in 2008 there was a spike, then it steadily came down in the last couple of periods,” he said. “But in the last six months we have seen it going up.” Gill said a major cause is online gambling, but cost-cutting and staff lay-offs, which causes a fall in controls, also opens up opportunities for fraud. he said every sector is vulnerable but financial services, which deal in money, always attracts fraudsters. Most large frauds start small and build up over time, Gill said. “as the fraudster gets more and more confident, you find individual transactions tend to get bigger and bigger,” he said. “ they then get discovered by accident, or the person takes time off and out pops fraud when someone else is doing their job, or an external party finds it.” How to combat fraud there are three main things that Gill said companies should be doing to prevent fraud: • raising awareness. “let staff and third parties know that, unfortunately, there are risks out there, and that these are the things to look for, and if you see them let us know,” Gill said. • Give staff means to report fraud through whistleblower hotlines or other channels. “someone always knew it was going on or had a suspicion, but didn’t know who they should talk to or what they should say,” Gill said. • Implement proactive means of f raud detection, such as putting in place electronic monitoring systems. that might mean looking at overlaps between supplier bank accounts and employee accounts, or looking at information across the organisation that looks a little strange, and then investigating. • Gill said companies should also consider fidelity insurance to cover the costs of fraud because the stolen funds are often blown on gambling or luxury items and can’t be recovered. Final ly, Gill said that when fraud is discovered, a compa ny need s to look at why it happened , what controls weren’t in pl ace a nd , if they were, why weren’t they work ing? But he said a company shouldn’t investigate the fraud themselves if they are not experienced: electronic information can be compromised in court if not handled property; legal issues can also arise in terms of unfair dismissal if staff are sacked. he also encourages clients to report the matter to the police. ••• The Clive Peeters case Failed retailer Clive Peeters was bit by a $19 million fraud carried out by payroll manager, Sonya Causer, in 2009. The theft highlights that most frauds are carried out by trusted employees. Causer transferred money to her private bank account and a company she owned from late 2007 to June 2009. But she covered it up by manipulating financial records. It was only when a fellow accountant noticed a $2 million discrepancy that the alarm bell was raised.
GRC Summer 2012
GRC Winter 2012