As part of International Fraud Awareness Week 2020, Partners of CurbyMcLintock, Paul Curby and Scott McLintock discuss how the threat of internal fraud and corruption risk for organisations has increased due to the COVID pandemic and provide insights into why the risk has increased and how organisations can mitigate against those risks.
What organisations might not realise is that staff might be more inclined to exploit control vulnerabilities in the organisations they work for given the uncertainty that COVID has created around job security, salary cuts, be it temporary or more longer term, and due to incentive payments (e.g. bonuses) having being cut or ruled out entirely. These factors can increase someone's motivation to commit a fraud and help rationalise their behaviors (i.e. I had my pay cut or I didn't get a bonus therefore I'm entitled to take from my employer). Motivation and rationalisation are two of the three components, as per the 'fraud triangle', that need to be present for a fraud to occur, with the third being opportunity which often presents itself in weaknesses in the organisation's control environment . We have seen that the control environment has changed for many organisations due to changes in work practices resulting from COVID. As a result of this, the fraud risk of organisations has increased exponentially due to risk of all three elements of the fraud triangle being impacted.
It is understandable that organisations have been focused on operations and their core business to try and keep their businesses afloat but this has created a blind spot as people have had to divert their attention away from emerging risks like fraud. In an environment where every dollar counts, considering the risk of fraud and misappropriation, especially in the context of the difficult economic conditions we find ourselves in, is imperative.
If you need fraud and corruption risk workshops and/or need a fraud risk review completed, please reach out to Paul at paul@curbymclintock.com.au or Scott at scott@curbymclintock.com.au to arrange a call to help understand your requirements.
About CurbyMcLintock
CurbyMcLintock is a boutique forensic services firm that helps organisations respond to misconduct matters quickly and efficiently. They can undertake independent investigations where there are allegations of fraud or other misconduct. Our philosophy is to leave an organisation in a better condition than when we arrived.
CurbyMcLintock can also assist with mitigation strategies including training and fraud risk reviews to build resilience against fraud and other risks occurring in the first place. This includes the implementation and management of whistleblower hotlines.
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WHO IS CURBYMCLINTOCK?
‘Because fraud happens’, you can’t afford to ignore it. A fraud can have a significant impact on an organisation beyond losses suffered directly from the fraud. There are also the costs associated with investigating, litigating, regulatory ramifications, public relations, staff management and the time required managing the fallout from a fraud.
A proactive approach is a sensible and cost-effective method to prevent fraud occurring in the first instance. We typically find that organisations rely on standard controls supported by policy and procedures as the only line of defence against fraud. This is simply not enough, and your stakeholders and regulators expect you to take a more robust, proactive approach to protecting your organisation from financial loss and other associated risks.
CurbyMcLintock can assist you become fraud resilient by adopting a methodology which combines skilled interviewing techniques and tapping into the knowledge of your staff who are at the coalface of business operations, to help uncover where your organisation is exposed to internal and external fraud. We will then provide you with mitigation strategies to reduce the risk of a fraud incident occurring