We’re pleased to kick off the new year by sharing our most-read blog posts from the Risk Management Blog in 2014.
1. Protecting Against Ghost Employee Fraud
Payroll fraud accounts for about 9.3% of occupational fraud at a cost of over $300 million per year across all types of organizations. One of the most common forms of payroll fraud is the use of “ghost employees” to divert money to fraudulent identities. Like all organizational frauds, this is a hidden crime that can best be prevented by controls designed to expose all payroll transactions.
2. Key Components of a Fraud Risk Prevention Policy
In this post, we offer an overview of the elements of a fraud prevention program that would be useful in any organization. Summarized from, Managing the Business Risk of Fraud: A Practical Guide, produced by a consortium of associations, the guidelines point to specific steps managers can take to implement an effective fraud prevention program.
3. Due Diligence as a Way of Life
Due diligence can be as simple as just asking the proper questions and making sure that a situation is “not too good to be true.” This idea of checking into the facts behind a transaction to ensure it is fairly valued is the source of the old adage, “let the buyer beware.”
4. Understanding the Relationships in the Cash Industry
Stop for a minute and think about the flow of cash in the American economy. You almost certainly have some in your pocket or purse right now, and at some point in the day, or the near future you will use it to buy something. Even if you rely mainly on plastic, you will sometimes tap an ATM for cash. Billions upon billions of cash dollars circulate every single day. Most importantly, you, and all parties concerned can easily access just the right amount of cash for their needs.
5. The Case for a Risk-Based Approach to Compliance Auditing
In general, compliance is conforming to particular expectations, standards, or behaviors, where risk is an exposure to potential loss or injury. When we think of compliance in the security arena, it often means that you are following prescribed standards, which could be regulatory, industry best practices, or standards that are otherwise customized or company specific.
6. Cash Auditing and Compliance in a New World
The banking industry has undergone significant and historic change since the financial crisis of 2008. The Dodd Frank Wall Street Reform and Consumer Protection Act created heightened expectations and new regulations for financial institutions.
7. How Does a Finance Director Steal $800K?
This is a classic story about an opportunist who defrauded his employer of almost a million dollars, yet avoided detection for years until he made a mistake in the summer of 2013. All of this loss could have been prevented with standard controls.
8. Latest Findings on Red Flag Employee Behaviors
The 2014 edition of the Association of Certified Fraud Examiners (ACFE) report on occupational fraud confirms and extends previous findings that fraud is a persistent threat across time and borders. Extrapolating the incidence of fraud from the 1,483 cases included in the study to the estimated world GDP, ACFE estimates that occupational fraud cost as much as $3.7 trillion in 2013.
9. Who are the Fraudsters in Your Organization?
We know the prevalence of occupational fraud is very high, costing organizations of all kinds an average of 5% from top line revenue every year. But what this means is that the importance of preventing these human risk frauds has a high payback, as well.
10. How Can You Cut Your Organization’s Risk of Fraud by 50%?
You’ve seen the data before: Organizational fraud is a huge annual cost. Managers want to reduce the costs, so the real questions are to learn why fraud occurs and what to do about it.
We hope you enjoyed this look back at 2014 and look forward to many more in 2015!