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 ...

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