• Fraud risks in a COVID-19 environment

    October 8, 2020

    If you haven't had a lot of time to worry about fraud and your internal controls recently, you're probably not alone. Many organisations facing a survival situation during COVID-19 may not have had the time or energy to devote resources to the prevention and detection of fraud. But should you?

    Many employees may have increased motivation to commit fraud due to issues with job security, economic uncertainty, personal or family health problems and abrupt change. The Fraud Triangle which describe the factors present when fraud is occurring include:

    -> opportunity

    -> incentive 

    -> rationalisation

    Internal controls focused on the prevention and detection of fraud may not be operating effectively in a remote environment, such as:

    -> seggregation of duties

    -> verification of receipt of goods/services more difficult

    -> overrides of controls to complete tasks may be more frequent

    What can you do to address these risks? Some suggestions include:

    -> understand how remote working with lower levels of human interaction may have impacted the effectiveness of your internal controls

    -> pay particular attention the supplier payment controls

    -> increase transaction review and exception reporting to identify anything unusual

    -> investigate when you suspect there may be the possibility of fraud - don't leave it until when get things return to normal

    It can take a significant amount of time under normal circumstances for fraud to be detected. In a COVID-19 environment with many employees working from home it may take even longer with severe financial impact. 

    If you would like to discuss options for strengthening your organisation's internal controls or have concerns about fraud, please don't hesitate to contact us. We are here to help.

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