Controlling preventable risks...

 

Organisational fraud is an increasingly significant economic problem in Australia. In a recent KPMG survey it was found that fifty-three per cent of all respondents had reported incidences of fraud in their organisations. Australian organisations need to be aware of and learn from previous incidences of fraud and the magnitude of fraud, and how they may be allowing their organisations to be at risk.

The fraud risk factors listed in the case are just a few of the characteristics you may come across in an organisation susceptible to fraud.  There are many factors not mentioned on this list however, including; 

• Low staff loyalty
• Lack of recognition
• Repressive or hostile work environment
• Unreasonable budget expectations
• Short-term focus of organisation
• Poor management
• Poor systems controls

Two factors listed in the case in particular which struck a note with me is the risk factors associated with an organisations perceptions of fraud risk and their ability to attract suitably qualified staff with affordable remuneration. In one of my previous workplaces little emphasis was placed on the importance of fraud and this was reflected in the organisations lack of provision for IT related costs.  For this reason IT staff were not provided with competitive remuneration making it near impossible to attract and keep qualified IT professionals on staff. For these reasons the organisation lacked suitable IT infrastructure which left them susceptible to fraud. 

One of the most important factors to consider within an organisation, where fraud is concerned, is the provision of an effective fraud control system.  This can be facilitated by ensuring there is a sufficient Corporate Governance framework and IT infrastructure in place.  It is integral that controls monitoring and evaluation processes are put in place to ensure the smooth running of systems and detection of fraud risk.  Prevention is also important and can be facilitated through regular fraud risk assessments, development of code of ethics and specific selection of staff. Most importantly however it is essential within an organisation to educate and increase the awareness of employees about fraud.