Strengthening the global fight against fraud, EY Forensic & Integrity Services along with the Association of Certified Fraud Examiners (ACFE) Mumbai Chapter are supporting the global movement, International Fraud Awareness Week.
Held under the aegis of ACFE global, “Fraud Week” champions the anti-fraud cause by encouraging ethics, integrity and adopting a zero-tolerance approach toward misconduct. According to ACFE’s 2018 Report to the Nations on Occupational Fraud and Abuse, fraud can result in organizations incurring almost a 5% loss to their annual revenues.
Further, companies worldwide ran a cumulative loss of over 7 billion dollars due to fraud and a median loss of $130,000 was declared by each victim company.
Arpinder Singh, Partner, and Head – India and Emerging Markets, Forensic & Integrity Services, EY said, “Fraud, misconduct and unethical practices continue to be some of the greatest risks to businesses.
Today, organizations must not only conform with the changing regulatory regime but also inculcate a transparent culture, educate on anti-fraud and compliance measures and define expected ethical behavior at the workplace.
Developing an integrity roadmap can empower organizations to navigate the challenges of the future and build equity in trust and reputation.”
“Fraud Week” (17-23 November 2019) is observed every year to raise awareness and educate stakeholders on the repercussions of fraud. In recent times, the seriousness of the global fraud problem has intensified.
According to an EY report, regulators and law enforcement agencies around the world have imposed more than US$11 billion of financial penalties since 2012 but unethical behavior is still on the rise. Some of the key trends observed in India from a fraud perspective are:
ISO37001 anti-bribery standard: The compliance landscape in India is maturing gradually, with many organizations adopting global standards and guidelines to fortify their anti-bribery and anti-corruption frameworks.
ISO 37001 has gained prominence and some of the key drivers for adoption include organizations’ global presence, competitive advantage and inspiring confidence amongst stakeholders.
Business email compromise: An EY report states that the average cost of a data breach last year was US$ 3.62 million. Business email compromise was one of the most common techniques adopted by cybercriminals as they duped unsuspecting victims.
The use of weak passwords, reusing old ones or not changing them regularly seems to be the main route of compromise, leading to financial and reputational distress.
Whistle-blowing: ACFE’s Report to the Nations 2018 highlights that almost 50% of corruption cases globally were detected by tips. Recent reports also stated that the US SEC received 5,212 tips during 2019 with a majority covering corporate disclosures, fraud, and manipulation.
As the numbers increase, whistle-blowing or the vigil mechanism serves as an important reminder for organizations to handle concerns and complaints in a prompt manner.
Technology adoption: Anti-fraud professionals are adopting emerging technologies to counter fraudsters that may be using new and sophisticated ways to commit crimes or target victims.
According to ACFE’s Anti-Fraud Technology Benchmarking Report 2019, around 55% of organizations are expected to invest and augment their anti-fraud technology over the next two years. 64% said the increased volume of transactions they can review with data analytics has been beneficial to their anti-fraud programs.
Globally, companies need to take significant steps in enhancing their anti-fraud efforts. ACFE’s in-house benchmarking survey 2019 states that 58% of organizations have inadequate levels of anti-fraud staffing and resources. But on the positive side, 60% of organizations were looking to increase their investment in anti-fraud programs in the next two years.