Managing Fraud Risk: A Practical Guide for Directors and Managers

Introduction

When working with Touche Ross in the early 1990s, my colleagues and I used to describe ourselves not so much as forensic accountants but as international fraud investigators. That is what we were paid to do, to go into organisations and investigate what had gone wrong with a view to helping our clients to recover the money that they had lost because of the fraud. It was fundamentally a reactive business at the time – analytical, “identify the culprit”, litigation and recovery focused, involving intensive and detailed work with long hours always guaranteed, success never guaranteed! It was absolutely the best job in the world.

Times change and the example above relates to one of the first anti-fraud control reviews that I carried out, looking to assess the strengths and vulnerabilities of the system to fraud threats. I have done many more since. Fraud still happens of course and when it does it will be investigated. However, many more organisations today understand that it is better for their reputations and their bank balances to take a more proactive stance against fraud. Consequently, corporate attention has focused in recent years more on the “upstream” areas of prevention and deterrence in the Fraud Framework that we saw in Chapter 1. Of course, forensic accountants are very pleased to assist in this area too. We always were in fact, it was simply that back in the 1990s very few organisations thought that fraud would ever happen to them and so they were not prepared ...