Protecting your business from fraud and corruption is paramount, with the damage caused to your finances – and reputation – leaving long-lasting, and perhaps even irreparable, damage.
Recent allegations of procurement fraud and corruption cases in South Africa during the Covid-19 pandemic have continued to show us how prevalent fraud and corruption are in the country, with the scandals that have erupted within the health sector, in particular a timely reminder of how we need to be alert to red flags.
The reality is that fraud and corruption is often committed under your own roof – or by those closely associated with your business – andyour biggest corruption threat could be closer than you think. To detect and prevent fraud and collusion, you need to properly knowboth your employees and your suppliers.
But is your system delivering on what you think it is? You would do well to investigate, because ACFE reports that fraudsters often display certain warning signs or red flags that they are engaging in illicit activity. Is your system picking up on those warnings?
You would do well to investigate, because ACFE reports that fraudsters often display certain warning signs or red flags that they are engaging in illicit activity.
And if it is, do you know how to find them?
Only one third of companies we polled were deploying the kind of data-analytics tools that can detect fraud or waste by vendors and or employees. Another 13% had the necessary tools but were still learning to use them, while 22% had no data analytics of any kind. It’s small wonder then that traditional lifestyle assessments don’t protect businesses against fraud and corruption.
Knowing what to look for is part and parcel of protecting your business. Understanding what questions to ask is one of the first steps in ensuring you are putting together a working detection and prevention framework to safeguard your business against corruption.
Perception over reality
Speaking with decision-makers in local businesses, several themes and trends have taken shape, both in terms of what executives are looking for in protecting their businesses from fraud and corruption and the perceptions they have of traditional lifestyle audits and monitoring systems.
Recent surveys and our own research have found:
- Nearly 20% of fraud was attributed to suppliers
- 14% of fraud was attributed to Employees or collusion
- Nearly 15% of employees have either undisclosed commercial interests, income or unexplained wealth
- 95% of all businesses have experienced employee theft.
- Nearly 40% (37.5%) of employees have stolen from their employer.
- 3 out of 10 employee theft cases lasted for more than five years.
- Employee fraud cases can last more than 10 years and cost an average of $5.4 million!
The executive is often concerned with the high costs of traditional lifestyle audits/assessments, consider them having a negative impact on employee moraleand time-consuming.Until now, there was no simple solution available to combat the threat of fraud and corruption.
The executive is often concerned with the high costs of traditional lifestyle audits/assessments, consider them having a negative impact on employee moraleand time-consuming. Until now, there was no simple solution available to combat the threat of fraud and corruption.
It is true that traditional lifestyle assessments aren’t reliable in detecting fraud and corruption. They are often employed after it has already occurred and they can be time-consuming and costly. Our solution, however, continuously monitors your business and picks up fraud and corruption before it happens, by ensuring you properly know your employees and suppliers.
Below the executive, in procurement, IT and legal departments, there are several valid concerns that have been revealed in our research, namely:
POPIA compliance: How does the collection of employee/supplier data comply with the POPIA Act?
Integrity of Data: Who owns the data collected? How will it be protected/destroyed?
Value for Money / Cost: Is a continuous, 24-7 monitoring system cost-effective?
IT Security: What measures are in place to protect against a security breach?
We have worked with compliance and legal experts in addition to TransUnion’s compliance and legal professionals to ensure that we provide a solution that respects the privacy of your employees and suppliers but is also compliant with POPIA and the NCA, besides ensuring that our solution delivers what you want it to do.
Ensuring your business is protected is crucial to its survival. Traditional systems do not effectively monitor fraud and corruption 24-7 and too often the damage is already done, once the red flags have been observed.
To find out how best to protect your business from fraud and corruption, get in touch and book a demo: https://corporateinsights.co.za/contact/