Global firms are realizing that the anti-fraud profession, led by Certified Fraud Examiners, is an important component of risk measurement and avoidance. Learn how recent risk-based management control systems are hastening the development of specialized anti-fraud agents.
George, the new CEO of a medium-sized manufacturer, wasn't sure he needed two Certified Fraud Examiners on staff. Hadn't the internal audit department sufficiently protected the firm against risk in the past? But then his auditors discovered some irregularities in the procurement department and the CFEs were called in. They eventually found that David, the acquisitions manager, had been building his stable of loyal vendors for years by soliciting kickbacks.
George was sold. He hired two additional CFEs who also work with internal audit to detect and deter fraud and conduct fraud examinations.
The case is fictitious but it's indicative of many firms throughout the globe that are recognizing that the emerging anti-fraud profession is integral to measuring and avoiding risk.
CEOs only have to read the ACFE's 2006 "Report to the Nation," which estimates that the typical U.S. organization loses 5 percent of its annual revenues to fraud, to begin to understand the magnitude of the problem. Applied to the 2006 U.S. Gross Domestic Product, this translates to approximately $652 billion in total losses. Management has to acknowledge the overall consequences of the fraud risk and fraud itself.
Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE, has said, "fraud is not an accounting problem; it's a social phenomenon." After management has its "anti-fraud epiphany," it can devise its strategies. Here we'll describe the changing roles and functions of CFEs and other anti-fraud professionals and how they can work together with internal audit departments and management.
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