The term “occupational fraud” may be defined as:
“The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organisation's resources or assets.”
Association of Certified Fraud Examiners
Proactive Fraud[1] Risk Management
A few years ago I wanted to develop a fraud risk management framework specifically for our Zimbabwe an environment (low trust, ad hoc regulations, etc…).
COSO and other frameworks served as sources of input to my work. For quite sometime I relied heavily on these sources. These frameworks lean immensely on internal controls. Indeed both EY and ACFE fraud surveys of 2006 place internal controls at the number one spot in both deterrence and detection of fraud at the work place.
I carried out my own study on fraud. I discovered that fraud is committed by people! Fraud is therefore a people issue; a behavioural problem. More often than not fraud is treated as a legal problem, an accounting issue, a this issue or that issue; anything else but people issue. We forget that it only becomes an issue in all these other areas when we want to deal with it; when fraud has been detected or suspected.
Before a fraud or fraud scheme is detected or suspected does it exist?
Where am I leading? It’s just as well that my destination is knowable in advance which would have been devastating to my plot if I were writing a novel. Yes I ‘m heading towards the HR department. That is where “people” people live, isn’t it?
Where, if any, do they feature in our anti fraud programmes? Of course, in most cases, if not in all cases, the HR people are called in after the act, that is, in disciplinary proceedings, the paperwork, etc. They are called in as paralegals! None therefore confronts the beast in its lifetime. It is left to roam at will. Those armed to deal with the menace are, by tradition, boxed out of the hunting grounds.
So, how can HR deal with fraud?
I am developing a framework based on how we can put an anti fraud spin on each of the typical HR functions. With contributions from anti-fraud enthusiasts amongst you, I will be sharing this spin with you in the weeks ahead.
Caleb
[1] Fraud is here used as a generic name for all “white-collar” crime at the workplace.
