Where fraud is detected: A necessary response
The risk of fraud is real and organisations can either choose to ignore or be resilient to fraud by having robust processes in place which assist in helping to deter, prevent and detect fraud.
Where a fraud occurs and is detected, how it is investigated is fundamental to an organisation’s response and the success of tackling fraud. How well are investigations in your organisation done? Do they consider both the specifics of the alleged fraud and the overall control environment?
Done well, an investigation can provide both a clear picture of what has happened in the particular case (aligned to legal requirements) and what actions should be taken to reduce the risk of a similar fraud occurring in the future.
The here and now: What an investigation provides
An effective fraud investigation:
Identifies the extent and scale of the potential fraud and informs decisions about how to proceed, for example what disciplinary action will be taken and whether to refer the matter to the police
Collates evidence to support a civil and/or criminal case, taking care that this is done in line with legislation so that any future case is not compromised
Demonstrates to staff that fraud is taken seriously by the organisation. This is particularly important where suspicions of fraud have been raised by a whistleblower or if staff working with the fraudster are aware of the fraud. A fraud investigation can both reassure staff upset by the fraud that things will be fixed and deter any staff who wish to capitalise on similar opportunities
Evidences to stakeholders, such as shareholders and funders, that allegations of fraud are responded to and appropriately investigated
Looking forward: Stopping it happening again
For a fraud to occur there must be opportunity for a fraudster to act, which means there has likely been a weakness or lapse in controls which has been exploited. As well as providing management with factual detail on the case, an effective fraud investigation leads into an assessment of:
In this way a fraud investigation, as well as confirming if there has been a fraud, how significant it is and hopefully leading to the recovery of lost revenue and assets, is an opportunity to improve the control framework by undertaking an appropriate and thorough response.
Elsiarc - Internal Audit, Risk and Compliance Services
Our team at Elsiarc has 30 years' experience of leading fraud investigations in Healthcare and various public sector bodies, working with internal and external legal teams, HR teams, police and other regulatory bodies. We can provide or support independent investigations of suspected frauds, combining audit and counter fraud knowledge and experience to provide a structured approach tailored to both the circumstances of the suspected fraud and risks of the organisation.
Appointing Elsiarc has the benefits of ensuring that resource implications are kept to a minimum (recognising that investigations require staff time to respond but through Elsiarc not in undertaking the investigation) and providing independent, external assurance.