Fraud Risk Management
Summary of Internal Audit Presentation on 24th April 2008.
Mr. Mohammed Al Mannai, Group Deputy Chairman opened the presentation by welcoming Teyseer Group senior management. He stated that presentation by Internal Audit on topical subjects should facilitate the knowledge and experience sharing. Mr. Mannai mentioned that in knowledge era learning is needed to improve company’s ability and adoptability to change
Mr. Mannai said that Teyseer is fortunate to have good, dedicated and fair management and workforce. However we should not be complacent and should believe in implementing strong controls and systems.
Rajeswar started his presentation stating Fraud can be catastrophic risk. It can lead to disaster; make companies out of business, loss of reputation and so on. We should know prevention (reduce opportunities), deterrence (how to respond to allegations and suspicious) and detection (difficult since concealed cleverly)
Why people commit dishonest act is something important to understand. The two major factors are MOTIVATION & OPPORTUNITY. Motivation is an outcome of -VALUES (family, cultural, social background), -WRONG PERCEPTION OF DETECTION, -WRONG JUDGEMENT ON PUNISHMENT, -NEED to EXTRAVEGEMCE, -GREED and -JUSTIFICATION (others are doing it). OPPORTUNITY starts with premise “it is not that perfect world”
There are many fraud concerns. It does not stop with loss. Auditors will qualify accounts, threat of professional negligence to staff, bad reputation that company with wrong people, no proper systems and Time loss for executives.
Management should be able to identify danger Red flags to pick up for investigation. Internal Audit can facilitate ASSURANCE by assessing whether company overlooked major risks? Whether risk warnings were ignored? Whether corrective action was sufficient? What danger signs are missed? Evaluation of barriers for fraud risk management like poor ethics, lack of Independence, fear, lack of Leadership, no accountability etc can be done
Sample codes of conduct issues were listed. GIA prevailed upon companies to determine policy or procedure document covering all these areas
The last part of the presentation was tabling INTERNAL AUDIT SERVICE CHECK List in two categories 1) CONVENTIONAL- PROTECTION OF ASSETS 2) MANAGEMENT SERVICE AREAS where value added strategic partnering matters.