How to fight corporate fraud in times of corona

Awareness of risk is where you must start. This is not a luxury when we know that the number of fraud cases is increasing due to corona.

More cases of fraud are expected to follow the corona period. On the one hand, because the safety measures challenge a number of internal controls as people work from home. On the other hand, the pressure to commit fraud is increasing due to a deteriorated economic climate.

As a result of homeworking, there is almost no social control. This means that fraudulent actions will remain undiscovered for a longer period of time and will therefore increase in severity and frequency. To respond to this, companies need to pay attention not only to compliance (respecting the rules), but also to integrity (respecting the rules when nobody is watching). A sound fraud prevention and detection policy is certainly not an unnecessary luxury. However, this is often not yet a priority with companies.

Prevention through fraud awareness

Prevention is better than cure. Above all, this means being aware of the risk of fraud and creating a culture in the company where the subject can be talked about. In addition, a number of minimal fraud controls should be considered. Keeping third party account numbers secure is one such measure. Or ensuring that certain databases are properly protected. Also be aware that certain functions lend themselves more to fraud. Financial functions are obvious, those people know the systems. Do not lose sight of the motive, it is not always about enrichment. In particular in difficult times, like today, people can be tempted to manipulate figures in order to paint a nicer picture of a gloomy reality.

More detection in the future

Companies are getting better at keeping an eye out for fraud risks. This in itself is of course a good evolution. Moreover, the framework that enables a more efficient approach is also evolving in a favorable direction. For example, there is the European Directive for the protection of whistleblowers which was approved last year. This carries with it the obligation to provide a whistleblower system and sets out how this can be done anonymously, but also provides guarantees for the person who blows the whistle.

Trust is a very important part of this. That trust is based on guarantees that reports can remain anonymous. That is exactly what the guidelines ensure. In the past, the only way to signal something was to send an e-mail to an internal auditor or the Board of Directors. Once a whistleblower system worthy of the name has been set up, anyone can make an anonymous report. It is also then possible to communicate anonymously with the reporter.

A solid fraud response plan as the final piece

When an organization is confronted with signs of fraud, it is paramount to respond appropriately by engaging independent fraud auditors to investigate possible irregularities.