Unit 2 Flashcards
International Context
Describe the role played by Transparency International in combating corruption
Mission - ‘to stop corruption and promote transparency, accountability and integrity at all levels and across all sectors of society’.
Places great importance on Independence, and it’s politically Non-Partisan (unbiased) status determining own programmes and activities. Highlights wrongdoing in both the public and private sector, producing reports. Promotes practical tools aimed at reducing the opportunity for corruption and enhancing the ability of people and organisations to resist it.
Private sector tools include ‘TI’s Business Principles for Countering Bribery’, and Corruption Perceptions Index.
The index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived level of public sector corruption on a scale of 0 (highly corrupt) to 100 (very clean), with its rank indicating its position relative to the other countries and territories in the index.
What is the mission of the European Anti-Fraud Office (OLAF) and what powers does it have?
To protect the financial interests of the European Union (EU) by investigating fraud, corruption and any other illegal activities – EG deter smuggling or trade of counterfeit goods.
Detect and investigate serious matters relating to the discharge of professional duties by members and staff of the EU institutions and bodies that could result in disciplinary or criminal proceedings
Support the EU institutions, in particular the European Commission, in the development and implementation of anti-fraud legislation and policies.
What particular fraud threats relating to the global market do you perceive according to the Kroll Global Fraud Report?
Answer: Apart from the insider threat, in a global marketplace where many international businesses have thousands of companies in their supply chain, risks become more difficult to identify and keep under control. Executives say their companies are particularly at risk of threats such as vendor, supplier or procurement fraud and of corruption and bribery, another type of fraud that has the propensity to increase as companies expand geographically into new territories. In the past year, nearly three-quarters of companies were dissuaded from operating in a particular country or region, predominantly Latin America and Africa, because of the heightened exposure to fraud it would bring.
NB -That the biggest fraud threat to companies comes from within.
3/4 of companies surveyed had fallen victim to a fraud incident in the past year, a rise of 14% in three years.
Of those companies within which fraud occurred and the perpetrator was identified, four in five suffered at the hands of at least one employee.
More than one in three victims experienced fraud by a member of their own senior or middle management, with less than half of those suffering fraud by a junior employee.
The most frequently cited incident is leaks of internal information. Most common by an internal employee, and only a small minority by an external hacker.
High staff turnover perceives as a main driver for increased exposure to Fraud.
How does the KPMG report Global profiles of the fraudster describe the typical fraudster?
Answer: In summary, the typical fraudster in the Kroll report:
· is 36 to 45 years of age
· was generally acting against his/her own organisation
· was mostly employed in an executive, finance, operations or sales/marketing function. He/she held a senior management position
· was employed in the organisation in excess of six years and
· in committing the fraud, frequently acted in concert with others.
NB :
- 79% of Fraudsters are men, the proportion of women has risen to 17% from 13% in 2010.
- 68% of Fraudsters were between the ages of 36 to 55.
- 65% are employed by the victim organisation.
- in 62% of cases the perpetrator colluded with others women at 45% are less likely to collude than men at 66%
- 38% of fraudsters have been employed for more than six years
- for role, 34% are executives and 32% are managers.
The report also identified issues in relation to the controls environment that existed when the frauds occurred and concluded:
- Weak internal controls were a factor in three-fifths of cases
- Even if controls are strong, fraudsters override or evade them
- Fraud is almost twice as likely to be perpetuated in groups as in solitude
- Groups of fraudsters very often compromise people both within and outside of the company.
- Technology helps both the fraudster and the company combatting the fraud.
Emphasis on conducting regular risk assessments, altering the way they prevent and detect fraud, as needed.
According to the Deloitte India Fraud Survey, what processes do companies in India need to adopt as fraud prevention measures?
- Regular monitoring/assessment of fraud risks.
- Conducting due diligence checks
- The use of proactive forensic data analytics
..in that order of preference as part of their fraud risk management framework.
NB - Reliance was already indicated via:
- Internal audit reviews
- Whistle-blower hotlines
- IT controls.
