Follow These Top Four Internal Controlling Mechanisms to Minimise Fraud Losses

Proactive anti-fraud controls play a key role in an organisation’s fight against fraud. While the presence of these mechanisms alone does not ensure that all fraud will be prevented, management’s commitment to and investment in targeted prevention and detection measures send a clear message to employees, vendors, customers and others about the organization’s anti-fraud stance. But what happens when controls are not present? What happens when budget cuts and shifting roles mean that some controls are overlooked or take a back seat to revenue and survival?

Below are the top four internal controls that reduce fraud losses and can improve detection:

  1. A robust code of conduct
  2. A strong internal audit department
  3. Management certifications of financial statements
  4. Management reviews of internal controls, processes, accounts, or transactions

These four anti-fraud controls will reduce both fraud losses and fraud duration by 50% or more. Internal audits and management reviews are both mechanisms that can be used to actively look for fraud, so their correlation with reduced fraud losses and duration stands to reason. In contrast, codes of conduct and management certifications of financial statements are less directly tied to fraud detection, but both mechanisms likely help increase the perception of detection and form the foundation for a holistic anti-fraud culture.

With fraud on the rise due to the economic downturn and global pandemic, now is the time to invest in anti-fraud controls; not ignore them. Your bottom line depends on it.

You can find more information about our services in 3RD Eye Investigators Services section or simply contact us and we can help you by conducting a thorough Fraud Check up for your organisation and build the Best Anti-Fraud Controls for your organisation. “Every Dollar you save is the dollar you will add up in your profit”.

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