A Consultant’s Recipe For Fraud Control

A consultant boils in-house fraud control down to six components. First on his list is “visible, vocal leadership support,” starting at the top but including managers all the way down. Other suggestions are more concrete, including a requirement for multiple signatures on transactions above some specified value. It’s crucial that controls not become rote procedures: Documentation needs to actually be examined before sign-off. The consultant, who claims decades of experience in the field, says the problem in 90 percent of fraud cases he’s seen is not lack of controls, but inadequate execution of controls.

Another specific recommendation is for small management-group meetings, where participants brainstorm what can go wrong and what the red flags might look like. “Brainstorming has a dual role,” he says. “It can highlight potential risk vulnerabilities for leadership to act on. It also engages participants in the anti-fraud fight.”