Week 9/Blog 3: Culture of the Company

In the incidences of fraud, bribery and corruption, I strongly believe that the culture of the organisation plays a large part in prevention and risk management and organisations need to put more emphasis on improving this component. If all of your employees are aware of the non-tolerance to fraud culture, can see that all programs put in place are being enforced and everyone is fulfilling their role in the company, this will act as a strong deterrent to any individuals or sub-groups to commit fraud.

In order to achieve this throughout the company, there are a few basic steps that are essential;

• Providing a respectful environment 

The 'tone' from the top of the company at the Board level through Senior Management to all employees should ensure that everyone feels respected with a strong anti-bullying policy. Providing this will ensure that no employees ever feel under appreciated or alienated. 

• Communicate and Enforce anti-fraud programs

Strong anti-fraud programs such as whistle-blower and whistle-blower protection programs are very effective for helping to reduce the likelihood of fraud. These programs however need to be properly executed and communicated with the employees of the company to ensure that everyone is made aware and know that they will be enforced should anything happen. 

• Code of Conduct Agreements

It is important to have a Code of Conduct created and signed by all employees in at least Senior Management. This document will outline that should a breach occur they will be personally liable and taken to court from this signed agreement. Through updating and re-signing this regularly, employees know what is expected of them and will be made accountable. This is then incentive to ensure everything under their control is being executed correctly.  

Week 8/ Blog 2: Interviewing Necessities

Recently a judge threw out a confession in court due to "strong evidence that the confession obtained from the defendant was under duress". The reasoning for this was in relation to the time taken and the heavy handed interrogation witnessed in the video footage. 

When interviewing a suspects there are a number of rules and regulations that need to be adhered to and as forensic accountants, we do not have the same power as police in these situations. Below is outlined some "Do Nots" in regards to interviewing;

DO NOT MAKE PROMISES

Making promises to your interview in order to persuade them to confess will result in the confession being inadmissible in court. This is due to confessions not standing if they are said under hope of advantage. Although the police do have the authority to provide incentives, as forensic Accountants we need to stay objective and make no attempt to convince the suspect to own up to the crime. 

DO NOT JUMP TO CONCLUSIONS

It is the forensic accountants duty to stay objective and only care about the facts. The importance of not jumping to conclusions can save a lot of time and resources by chasing false leads. 

For an interview, I would suggest using the PEACE model approach. I believe that the conversation management based framework would be most effective through keeping a calm environment and making the interviewee feel comfortable and able to think rationally. Due to those characteristics of the framework, its is also very useful in not providing inadmissible confessions. 

Week 7/ Blog 1: Theories behind Fraud

Within the risk of fraud continuing to be on the rise within businesses in the 21st Century, many theories have been developed to predict and prevent scenarios where it is likely. The three main theories are, Differential Association Theory, Strain Theory and Cressey’s Triangle. 

Differential Association Theory provides and explanation into why individuals form a subgroup to commit fraud. Alternatively, Strain Theory looks into external and internal strains that can push individuals to crack and commit fraud. 

I believe that Cressey’s triangle is most useful out of these 3 for being able to prevent fraud in terms of groups and individuals. This theory explores with 3 factors, fraud can and likely will happen; Opportunity, Rationalisation and Pressure. This can be applied to a business by reducing the pressure on employees by not setting high targets, reducing opportunity by implementing secure governance and reduce rationalisation by ensuring all employees are treated with respect/ Reducing these factors will undoubtable decrease the likelihood for fraud to be committed. 

The woman who previously had be role at my current workplace committed fraud by processing an additional $3000.00 into her last paycheque. The whole time she was with the company both opportunity and pressure were there due to few internal controls and the fast paced nature of the role with very high expectations. The fraud never occurred however until the third factor, Rationalisation, was presented. Before her resignation, the owner of the small company wasn’t ever at the office and reduced everyones rate of pay. With this, she was able to rationalise committing fraud by believing that the owner didn’t deserve the extra money. 

My advice for preventing fraud in businesses would be to follow Cressey’s Triangle and reduce all 3 factors as much as possible.