Profiling The Fraudster: Removing the Mask to Prevent and Detect Fraud

Chapter 18Profiling as Part of Your Sound Antifraud Program

IN DEVELOPING A FRAUD PROFILING METHODOLOGY as part of a sound antifraud program, you need to develop an awareness of the following key fraud risk indicators:

• Characteristics of employees acting suspiciously and behavioral warning signs.
• Signs or indicators of the modus operandi or fraud methodology.
• The existence of high-risk departments and positions.
• Acknowledging and understanding which industries are highest risk and if the organization is in or trading with that industry.
• Indicators of consequences of fraud risk.

It is incumbent upon senior management to recognize a proactive approach, through a sound antifraud program, as an important part of their responsibility in attending to organizational and system vulnerability and managing fraud risk.

A sound antifraud program includes the following methodologies, all targeting the deviant behavior of the human being:

• Enhanced audit department.
• Forensic accounting capacity.
• Code of ethics or code of conduct to include declarations of conflict of interest and gifts.
• Fraud policy.
• Fraud training program.
• Segregation of duties for key activities.
• Appropriate recruitment procedures, selecting honest candidates.
• Policies for rotation of staff duties and forced vacations.
• Knowledge of key fraud risks and controls, and their regular monitoring.
• Whistleblowing hotline and policy.
• Fraud risk assessment process.

If we are to consider the introduction of profiling to our antifraud ...