Preventing fraud with robust technologies and processes

Setting up a defendable IT perimeter is one way to deal with the external threat of hackers and crackers, but how do you deal with the errant activities of internal staff?

One of the better-known techniques used to defraud a business is salami slicing, where an individual repeatedly rounds to the nearest penny or unit and deposits the money collected into separate accounts. Salami slicing is a popular mechanism in fiction but it also happens in real life, with a Californian man arrested in 2008 for fraudulently creating 58,000 accounts.

Of course, that couldn’t happen in your business! Your internal processes are tight and your executives keep a close watch over potentially errant employees. Or so you think! The bad news is that every organisation is at risk of internal fraud and being complacent could prove costly, especially as fraud is just as likely to be committed by senior level employees.

Research from KPMG shows fraud among senior finance personnel and even chief executives is on the rise, with board members now accounting for almost a fifth (18%) of all business fraud. The analysis shows that the typical fraudster is male, aged 36 to 45, holds a senior position in finance and has worked for their company for more than a decade.

So, do you still feel confident about your people and processes? Maybe your current processes will help identify the bad apples? Don’t be so sure, with KPMG’s research also revealing that the exploitation of weak controls increased as a proportion of fraud from 49% in 2007 to 74% this year.

It is crucial, then, that organisations re-focus on fraud detection and prevention technologies to help reduce the risk of internal fraud. The best techniques work in tandem with your existing systems, providing an automated and user-friendly means to identify unusual activity.

While the poor economic climate might be one explanation for employee fraud, it is certainly no excuse. Implementing the right fraud detection systems must be a priority, and will help to ensure that your organisation is protected from unscrupulous employees.

SHARETweet about this on TwitterShare on LinkedInShare on FacebookShare on Google+Pin on PinterestDigg thisShare on RedditShare on TumblrShare on StumbleUponEmail this to someone

Simon Fowler is Managing Director - Commercial Division of Advanced Business Solutions, formerly COA Solutions (and prior to this, OpenAccounts). Simon joined Advanced Business Solutions in 2010 as Operations Director before becoming Managing Director. Simon has a long, successful career in the IT Industry which includes 12 years at IRIS software where he held divisional Managing Director roles. Simon has a strong knowledge of both the third and commercial sectors.