FRAUD RISK

risikoklar.org

RED FLAGS IN CONTEXT

Internal fraud (occupational fraud),

can be defined as:

“the use of one's occupation for personal

enrichment through the deliberate misuse

or misapplication of the organization's

resources or asset".

Association of Fraud Examiners (ACFE)

risikoklar.org

R I S I K O K L A R . O R G

Red Flags

R I S I K O K L A R . O R G

TONE AT THE TOP

INEFFECTIVE INTERNAL CONTROLS

DISCONNECT TOP AND GROUND

SUPPRESSION OF INTERNAL WHISTLEBLOWING

INEFFECTIVE & SLOW INVESTIGATIONS

EXTRINSIC MOTIVATIONJOB DISSATISFACTION

DISCONNECT POLICIES AND PRACTICES

CULTURE OF FEAR AND BYSTANDING

Corporateculture:Speak-updenied infavor ofcover-up 

R I S I K O K L A R . O R G

organizationalculture of fearand apathy

internal controlweaknesses &internal auditineffectictive

governance &policies remainlifeless - staffdisengage &

mentally resign

R I S I K O K L A R . O R G

Models(and Limitations)

R I S I K O K L A R . O R G

c.f. ACFE: http://www.acfe.com/fraud­triangle.aspx

Rationalization

Opportunity

Pressure

Fraud Triangle(1973, Cressey)

R I S I K O K L A R . O R G

Opportunity

RationalizationPressure /Incentive

Capability

Fraud Diamond

(2004, Wolfe & Hermanson)

FraudTransparency

GoodGovernance

R I S I K O K L A R . O R G

R I S I K O K L A R . O R G

Systemic issues

Focus onMetrics -

[massaged]numbers vsqualitativeapproaches

Corruption assign of socialinstabilityand decay

Corruption assecret activity -Transparencyas panacea R I S I K O K L A R . O R G

Ethics trainingas abstractexercise ->

ethics-fatigue& disconnect