NORTHEAST INSTITUTE FOR QUALITY COMMUNITY ACTION FRAUD PREVENTION CHECKLIST According to the most recent research by the Association of Certified Fraud Examiners*: The median loss to corporations caused by organizational fraud was $140,000 and in 50% of these cases, the organization was unable to recoup any of the loss; On average the fraud lasted for 18 months; The majority of the perpetrators had never been previously charged or convicted of a fraud-related offense; Perpetrators were most often associated with organizational accounting and billing functions; The most common characteristics of the perpetrator was living beyond one’s means or an individual experiencing financial difficulties (63%); Routine independent organizational audits only detected fraud in 3% of the cases reported. Any organization is vulnerable to fraud but smaller companies are at higher risk due to inadequate controls and resources. Fraud Prevention Checklist: According to the ACFE, the most cost-effective way to limit fraud losses is to prevent fraud from occurring. Their checklist is designed to help organizations test the effectiveness of their fraud prevention measures. 1. Is ongoing anti-fraud training provided to all employees of the organization? ❑❑Do employees understand what constitutes fraud? ❑❑Have the costs of fraud to the company and everyone in it — including lost profits, adverse publicity, job loss and decreased morale and productivity — been made clear to employees? ❑❑Do employees know where to seek advice when faced with uncertain ethical decisions, and do they believe that they can speak freely? ❑❑Has a policy of zero-tolerance for fraud been communicated to employees through words and actions? 2. Is an effective fraud reporting mechanism in place? ❑❑Have employees been taught how to communicate concerns about known or potential wrongdoing? ❑❑ Is there an anonymous reporting channel available to employees, such as a third-party hotline? ❑❑Do employees trust that they can report suspicious activity anonymously and/or confidentially and without fear of reprisal? ❑❑Has it been made clear to employees that reports of suspicious activity will be promptly and thoroughly evaluated? ❑❑Do reporting policies and mechanisms extend to vendors, customers and other outside parties? 3. To increase employees’ perception of detection, are the following proactive measures taken and publicized to employees?
NORTHEAST INSTITUTE FOR QUALITY COMMUNITY ACTION FRAUD PREVENTION CHECKLIST According to the most recent research by the Association of Certified Fraud Examiners*: The median loss to corporations caused by organizational fraud was $140,000 and in 50% of these cases, the organization was unable to recoup any of the loss; On average the fraud lasted for 18 months; The majority of the perpetrators had never been previously charged or convicted of a fraud-related offense; Perpetrators were most often associated with organizational accounting and billing functions; The most common characteristics of the perpetrator was living beyond one’s means or an individual experiencing financial difficulties (63%); Routine independent organizational audits only detected fraud in 3% of the cases reported. Any organization is vulnerable to fraud but smaller companies are at higher risk due to inadequate controls and resources. Fraud Prevention Checklist: According to the ACFE, the most cost-effective way to limit fraud losses is to prevent fraud from occurring. Their checklist is designed to help organizations test the effectiveness of their fraud prevention measures. 1. Is ongoing anti-fraud training provided to all employees of the organization? ❑❑Do employees understand what constitutes fraud? ❑❑Have the costs of fraud to the company and everyone in it — including lost profits, adverse publicity, job loss and decreased morale and productivity — been made clear to employees? ❑❑Do employees know where to seek advice when faced with uncertain ethical decisions, and do they believe that they can speak freely? ❑❑Has a policy of zero-tolerance for fraud been communicated to employees through words and actions? 2. Is an effective fraud reporting mechanism in place? ❑❑Have employees been taught how to communicate concerns about known or potential wrongdoing? ❑❑ Is there an anonymous reporting channel available to employees, such as a third-party hotline? ❑❑Do employees trust that they can report suspicious activity anonymously and/or confidentially and without fear of reprisal? ❑❑Has it been made clear to employees that reports of suspicious activity will be promptly and thoroughly evaluated? ❑❑Do reporting policies and mechanisms extend to vendors, customers and other outside parties? 3. To increase employees’ perception of detection, are the following proactive measures taken and publicized to employees?
FraudPreventionChecklist2012.docx