FRAUD can cripple organisations and de-stabilise governments. It can be very hard to find, and even if it is detected, it can be even harder to prosecute.
Globally it is estimated that the typical organisation loses about 5% of its revenue to employee fraud.
In fact, global statistics by the Association of Certified Fraud Examiners indicate that fraud is perpetrated on average 18 months before being detected. There are a few common tell-tale signs that can give it away: fraudsters normally live beyond their means, they have financial difficulties and they have unusually close relationships with their customers. It was also established that fraud is most often detected by a tip-off.
In organisations, this means employees are the first line of defence. When employees are negligent or lack knowledge, this defence becomes vulnerable. So what can we do to make our employees report fraud?
In my opinion, prevention is the best form of defence and any organisation with governance and ethics high on its agenda should prioritise the prevention of fraud.
Firstly, create the right culture where it is commonplace – in business and government – to fuel awareness and provide education about fraud risks.
Secondly, it is important to distinguish between a general campaign to create fraud risk awareness and a targeted campaign that really educates staff on fraud risk and how to deal with it.
Too many companies and government entities in South Africa make the mistake of thinking they have done their duty to create fraud awareness, when all they have done is to distribute a few posters, pamphlets and stationery branded with anti-fraud messaging. Unfortunately, our experience has shown that this does not work.
The only thing that really works to stamp out fraud and corruption is intensive training and education on fraud.
This kind of training is not only good for the organisation, but restores employee morale, improves investor or shareholder confidence and saves organisations money and the hassle of legal battles.
The best type of anti-fraud education within organisations is the compulsory, online kind that allows employees to complete it in their own time and also to interact with the examiner.
It can be adapted for a specific business unit and it is easily deployed, tallied and marked. It also has the added benefit of leaving an audit trail and can’t be easily lost or spoilt, like paper-based tests. The hours spent on a questionnaire can also be tallied.
In my view, organisations that don’t use online anti-fraud education systems will have a long way to go to catch up.
To really get to grips with institutional fraud, organisations must get with the programme, be it via email, an online questionnaire or even a phone or tablet app.