The-Accountant-Jul-Aug-2016
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GOVERNANCE<br />
By CPA David Kariuki Gitare, gdkariuki@gmail.com<br />
TACKLING<br />
OCCUPATIONAL FRAUD<br />
<strong>The</strong> Case For A Whistle-Blowing Hotline<br />
Desolate as it may be, the Chase<br />
Bank debacle massively<br />
affirms the findings of the<br />
<strong>2016</strong> Report to the Nations<br />
published by the Association<br />
of Certified Fraud Examiners (ACFE).<br />
<strong>The</strong> findings in the <strong>2016</strong> Report to the<br />
Nations have not been any different, at<br />
least not significantly, compared to the<br />
prior years’ reports. In a summary extract,<br />
the consistent findings have been that;<br />
• Fraud incidents involving the highest<br />
leadership in an organization, in this<br />
case the Board of directors, results in the<br />
highest financial losses<br />
• <strong>The</strong> most common fraud detection<br />
method was tip offs<br />
• Organizations that had reporting<br />
hotlines were much more likely to detect<br />
fraud through tips than organizations<br />
without hotlines<br />
• Fraudulent financial statement schemes<br />
resulted in the highest financial losses<br />
• <strong>The</strong> longer the fraud lasted, the greater<br />
the financial loss that was incurred<br />
• Whistle blowers were most likely to<br />
report fraud to their direct supervisors or<br />
company executives<br />
• <strong>The</strong> most common fraud concealment<br />
methods were creating and altering<br />
physical documents<br />
Considering that the <strong>2016</strong> Report<br />
to the Nations (the Report) is the ninth<br />
report issued by the ACFE, it is about<br />
time individuals charged with fraud risk<br />
management responsibilities revisit the<br />
earlier reports, identify occupational fraud<br />
and abuse trends and craft or recommend<br />
suitable fraud risk management strategies<br />
for their organizations.<br />
It has variously been reported that<br />
the Chase Bank sham was anonymously<br />
26 JULY - AUGUST <strong>2016</strong>