1 HOW FRAUDSTERS FOOL THE AUDITORJenny Reid

2 Presentation Road Map COMMON DENOMINATORMy area of expertise – People Risk How do we fool an auditor? COMMON DENOMINATOR

3 The crime victim's prayer“I thank Thee I was never robbed before; They took my purse but they did not take my life; They took my all, it was not much; It was I who was robbed, and not I who robbed.” Matthew Henry, English commentator on the Bible and Presbyterian minister,

4 What is an audit? The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, internal auditing, and government auditing, but similar concepts also exist in project management, quality management, water management, and energy conservation. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. Wikipedia

5 Who is an auditor? Forensic Quality Cost Performance InternalStatutory

6 What are the COMMON DENOMINATORS ???

7 Staff Suppliers Management Clients Authorities Reactive PEOPLE

8

9 Can we fool an auditor? “Scamming the auditors is as simple as cut & paste”

10 External Case Study iFacts

11 Hardworking staff Need training Conference with team building activity

12 Supplier Good service Nice guy Helpful Synergy in service offering

13 Finances Possible business venture Rented a property from usUsed his services again Discussed joint marketing strategy

14 HELP US ALL TO GROW and $$$MY AIM HELP US ALL TO GROW and $$$

15 Finances Introduction to my suppliers Introduction to my clientsAccess to our marketing contacts and systems PROVIDED INFORMATION FREELY

16 Colleague Supplier Tenant PEOPLE

17 Colleague Supplier Tenant THREAT PEOPLE

18 DID WE HOOK THE WORM? YES

19 When should we have been aware of the risk?Gave good service Nice guy Paid his rent late Reasons for delay varied from time to time Did business with our clients and did not pay on time His clients always let him down and this caused payment delays Never introduced us to his contacts His suppliers were always unreliable

20 Did we verify any information?

21 NO!!

22 The Result Finances Loss of US$3 000 Loss of reputationHours of investigation

23 Finances Investigation Findings 6 fraud charges in New Zealand6 months imprisonment in New Zealand for fraud 10 cases of fraud related charges in Gauteng 1 assault charge Various civil charges Shocking client references

24 Where did I go wrong?

25 IFACTS VENDOR FRAUD SURVEY

26 Was I going to jump….?

27

28 Internal People Management

29 Factors necessary for a successful whistleblowing programmeReward mechanism Independent platform Ongoing awareness programmes Provide feedback Executive commitment Clear reporting structure for receipt of reports Commitment and buy in from ALL stakeholders

30 Staff Suppliers Management Clients Authorities Threat PEOPLE

31 HOW HAPPY ARE YOUR EMPLOYEES?

32 WHERE DOES INTEGRITY BEGIN & END?

33 ARE YOUR STAFF MOTIVATED?

34

35

36

37

38

39 Is there hope?

40

41 People Risk Management ProgrammeWellness People Management People Safety & Security Third Party Executive Security / Loss Control People Risk Management Programme HR Procurement

42 A good employee wellness programme will include advice and recommendations on:o   Good Health o   Stress management o   Motivation o   Counselling services o   Ethics & Fraud awareness o   Personal financial advice o   Security awareness      

43 The people risk prevention programme should include the following:·      Employee screening ·      Integrity assessments ·      Truth verification tests ·      Hot line ·      Third party / vendor verification ·      People Risk Database

44 Online People Management tools include:·      Induction training ·      HR climate & employee satisfaction surveys ·      Appraisals and performance assessments ·      Recruitment strategy ·      Fraud investigations ·      Exit interviews ·      Health and safety assessments & training ·      Security and risk assessments & training ·      Risk policies and procedures

45

46 How effective is your People Risk Management Programme?