Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance, 2nd Edition

CHAPTER 11

Designing a Robust Fraud Prevention Program

EXECUTIVE SUMMARY

All entities need a robust fraud prevention program staffed with savvy and experienced fraud examiners. The Certified Fraud Examiner (CFE) certification is the gold standard in fraud detection and prevention, and all corporate investigators should be so certified. Forensic accountants and forensic data analysts are also needed in fraud prevention units. A financial integrity concept should be used in protecting the organization from all forms of fraud and abuse while reducing the risk of financial and reputational harm. The program should be aligned with the internal audit function, as there are great synergies to be achieved with such a partnership. Interaction with internal auditors will result in increased discovery of fraud and abuse issues. The fraud prevention program should include the detection, investigation, and prevention of all frauds including financial statement fraud, asset misappropriation, and bribery and corruption schemes. The investigative unit needs a wide variety of fraud detection software and technology solutions as well as excellent cross-group collaboration throughout the company.

Companies face numerous fraud risks. There are the financial risks from fraud losses, shareholder lawsuits, government investigations, prosecutions, convictions, and fines. Along with financial risk goes the reputational risk and damaging media attention from fraud. Vicarious liability, in which a company ...