Kenya is currently faced with alarming trends of record highs in white-collar crime and seemingly record lows in ethics. Fraud reduction and prevention cannot be left to legislators, regulators and law enforcement and requires the attention of all of us to create a culture of honesty, high ethics and compliance.
Fraud is defined as commonly including activities such as theft, corruption, conspiracy, embezzlement, money laundering, bribery and extortion. Fraud essentially involves using deception to dishonestly make a personal gain for oneself and/or create a loss for another.
In a recent report by the Chartered Institute of Management Accountants of the UK (CIMA), the following was reported:
- Organisations may be losing as much as 7% of their annual turnover as a result of fraud,
- Corruption is estimated to cost the global economy about United States Dollars 1.5 trillion each year,
- Only a small percentage of losses from fraud are recovered,
- A high percentage of frauds are committed by senior management and executives,
- Fraudsters often work in the finance function,
- Fraud losses are not restricted to a particular sector or country,
- The prevalence of fraud is increasing in emerging markets.
Preventing and reducing fraud is done through the following:
- Creating an internal culture of compliance,
- Identifying the main risk areas in the organisation where fraud could be committed,
- Understanding, assessing and mapping the scale of the risk,
- Developing a fraud risk response strategy,
- Implementing the strategy and allocating responsibilities,
- Implementing and strengthening internal controls,
- Periodically reviewing and refining the systems, processes and internal controls.
Using the quad method, The CFOO Centre helps organisations in assessing 5 key areas of their business cycles for fraud risk including:
- Sales (and credit notes) and collections,
- Purchasing and payments,
- Production (manufacturing), inventories and warehousing,
- Payroll and expenses,
- Financial statement reporting.
Timely detection of fraud incidents will go a long way in mitigating losses and improving chances of recovery. Is it now time for your organisation to ensure that your current fraud risk management strategies are revised to ensure that they are in line with the current fraud trends and secondly, adequate to take care of future growth besides increasing ways of detecting frauds proactively?
The CFOO Centre will help you establish an effective fraud risk management framework as well as design an anti-fraud program for your organisation. We will assist you in implementing and advising you on the controls that will prevent fraud as well as enable you to detect fraud as soon as it happens.
Our services will more than pay for themselves!
Call us on +254-736-515-168