I have recently had the pleasure of assisting a client to recover in excess of one million Rand in duplicated payments. I was also able to alert the client to seven unexplained and apparently undisclosed relationships that employees had with suppliers and I could point the client to a multitude of control deficiencies that they were totally unaware of.
How did I manage all this? – Not a crystal ball I can assure you!
Probably one of the most valuable, yet under-utilised, tools in the fraud prevention arsenal is Electronic Data analysis. Most organisations now have computers that are used daily to ensure the efficient running of the business. These computers store information that is extremely valuable to the organisation and which, if correctly analysed, can provide a wealth of information regarding potential and yet unidentified risks to the organisation.
No matter how vigilant, management can never expect to prevent all fraud. Such an expectation would lead to complacency that would put the organisation at risk. It is an absolute necessity that fraud prevention plans include measures that will allow for the early detection of perpetrated frauds. The early detection of frauds and action against the perpetrator is probably the most effective prevention measure an organisation has.
Specialised software combined with the correct mindsets can proactively find the “red flags” (warning signs) of potential fraud within data. Our methodology entails a critical analysis of data contained in the Vendor master file, the Customer master file, the Employee master file and transactional files. What the interrogator is looking for are signs contained in the data that indicate a potential fraud. These signs are then followed up to assess whether there is evidence of fraud or whether there is a legitimate explanation for the red flag identified.
Cost is the most often quoted reason for not implementing this aspect of a fraud prevention strategy. My experience is that data analysis provides the greatest possibility of return and, even if the analysis identifies no specific fraud, the insight into deficiencies in controls and the peace of mind that is provided as a result, far outweighs any initial cost. “Easy for you to say”, I hear. Why not try it for yourself.