building a strong corporate culture …...building a strong corporate culture begins with managing...

BUILDING A STRONG CORPORATE CULTURE BEGINS WITH MANAGING FRAUD RISKAssessing the Results of the Latest White-Collar Crime and Fraud Risk Survey

The IIA Philadelphia Chapter2019 Spring Summit - May 3, 2019‘Elevating Performance - Taking a Leadership Role in Raising the Standards’

DISCLAIMER, TRADEMARK, AND COPYRIGHT NOTICEPHILADELPHIA CHAPTER OF THE IIA

• The Philadelphia Chapter was established in 1943, and is the 5th affiliate chapter of The Institute of Internal Auditors (IIA). The Philadelphia Chapter, its board of governors, its officers, The IIA , and today’s presenters are not responsible or liable for any acts or omissions and specifically disclaim any and all responsibility or liability for acts or omissions.

• The material contained herein or communicated is for informational purposes only and should not be construed as accounting, financial, tax, or legal advice. Please seek guidance specific to your questions or concerns from qualified advisors.

• All content including graphics or art work is protected by law and may not be duplicated in any form with out the express written permission from Protiviti, Inc. and the Philadelphia Chapter.

• © 2015 Philadelphia Chapter of the IIA

IIA PHILADELPHIA CHAPTER 2019 SPRING SUMMIT #SpringSummit2019

FRAUD BY THE NUMBERS

© 2019 Protiviti Inc. An Equal Opportunity Employer M/F/Disability/Veterans. Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services. All registered trademarks are the property of their respective owners.

4

REPORT TO THE NATIONS (ACFE)EXCERPTED FROM THE 2018 GLOBAL STUDY ON OCCUPATIONAL FRAUD AND ABUSE

A QUICK LOOK:

WHITE COLLAR CRIME AND FRAUD

RISK SURVEY RESULTS


6

https://www.protiviti.com/US-en/insights/protiviti-fraud-risk-survey?utm_source=blog&utm_medium=blog&utm_campaign=whitecollarcrimesurvey


WHEN IT COMES TO BUILDING A STRONG CORPORATE CULTURE, “FRAUD RISK MANAGEMENT” REMAINS A BIT OF A MISNOMER

7

Organizations continue to lag in employing leading practices to build a strong culture.

Resources represent a significant challenge in building a strong corporate culture with a clear fraud risk strategy.

Many companies lack a fraud risk management program, including policies to mitigate fraud.

Third parties represent a significant gap in fraud risk management.

01

02

03

04

Our Key Findings


RELATIONSHIP BETWEEN “E” AND “C(s)” STRATEGIES

8

Ethics CulturePrinciples, standards and values of an

organization that govern strategic decision-making, operations and

conduct.

“Personality” of an organization that develops from shared principles,

values, beliefs and conduct.

Compliance ConductAlignment with laws, regulations, principles

and standards of an organization that govern strategic decision-making,

operations and conduct.

Behavior of an individual or organization expressed in action,

reaction or inaction.

Establish desired corporateculture, and assess current state against desired state to reinforce adoption of ethical behaviors, practices, internal controls/compliance mechanisms that are conducive to limitingopportunities for misconduct and non-compliance

Implement key controls across first and second line functions and monitoring mechanisms with actionable metrics and reporting to identify and address conduct risk

Strong mechanisms and desired behaviors for a robust ethical culture with proactive identification of potential for culture, conduct and compliance risks


ORGANIZATIONS CONTINUE TO LAG IN EMPLOYING LEADING PRACTICES TO BUILD A STRONG CULTURE

9


RESOURCES REPRESENT A SIGNIFICANT CHALLENGE IN BUILDING A STRONG CORPORATE CULTURE WITH A CLEAR FRAUD RISK STRATEGY

10


MANY COMPANIES LACK A FRAUD RISK MANAGEMENT PROGRAM, INCLUDING POLICIES TO MITIGATE FRAUD

11


THIRD PARTIES REPRESENT A SIGNIFICANT GAP IN FRAUD RISK MANAGEMENT

12

DATA ANALYTICS, FRAUD AND THE PATH FORWARD


DATA ANALYTICS, FRAUD AND THE PATH FORWARDDoes your organization have a fraud detection program? (Shown: “Yes” Responses)

14


DATA ANALYTICS, FRAUD AND THE PATH FORWARD (CONT.)If Yes: Who in your organization is responsible for the fraud detection program?

15


DATA ANALYTICS, FRAUD AND THE PATH FORWARD (CONT.)Does your organization actively utilize forensic data analysis to identify potential red flags and fraud indicators (i.e., fraud detection techniques)?

16


DATA ANALYTICS, FRAUD AND THE PATH FORWARD (CONT.)How often does your organization conduct surprise audits within the organization?

17

REPORTING, INVESTIGATION AND

CORRECTIVE ACTION


REPORTING, INVESTIGATION AND CORRECTIVE ACTION What level of involvement does your organization’s Audit Committee have in the investigation of alleged fraud or misconduct?

19


REPORTING, INVESTIGATION AND CORRECTIVE ACTION (CONT.)

What level of involvement does your organization’s Audit Committee have in the investigation of alleged fraud or misconduct?

20


IN CLOSING

21

• The importance of corporate culture is garnering an unprecedented amount of media and organizational attention, and yet, there has not been an equal amount of introspection or root cause analysis as to what has led to some of the more noteworthy fraud and misconduct cases occurring in the last year.

• Understanding the interplay between fraud, corruption and corporate culture — and the controls necessary to mitigate ethical failures — can accelerate efforts to affect positive organizational change and process improvements.

• In today’s business environment, executives need to ask themselves one question:

Do we want to be viewed as leaders of ethical business practices or are we willing to risk being the latest headline involving a toxic culture that ultimately results in embarrassing — and costly —fraud and misconduct?

Follow us on Social Media:@IIA Philadelphia

Institute of Internal Auditors Philadelphia Chapterhhtps://www.linkedingroups.com/groups/106938

Visit our FB page: IIA Philadelphia

• Pamela Verick, Director• Protiviti Forensic• [email protected]• +1.703.299.3539

IIA PHILADELPHIA CHAPTER 2019 SPRING SUMMIT #SpringSummit2019

building a strong corporate culture …...building a strong corporate culture begins with managing...

Documents