Business Side of Fraud

Charging anti-fraud costs to investigated business units might backfire

Consider keeping investigative charges within corporate security and other anti-fraud functions. You might then increase reporting of fraud and other crimes.

My company has a significant number of corporate clients. Some are in the Fortune 100, and some are far from making the list. My staff and I have a front-row seat into robust corporate security functions and anti-fraud methodologies of some prestigious firms. This allows me to see the best (and worst) practices of each firm.

One of the corporate security best practices that’s a personal favorite is the team approach to investigations. Instead of the security department (or any anti-fraud department) taking full authority and responsibility for an investigation, members of appropriate business partners would achieve consensus. Most ethics and compliance investigations, for example, would have legal and human resources team members involved in the case. Organizations would include other corporate citizens — such as business unit managers, auditors, and IT professionals — as needed. When necessary, they’d bring in outside consultants, such as interview specialists, forensic computer specialists or forensic accountants.

Another corporate security best practice occurs in a corporation that has clear and codified procedures for how a business unit or the on-site security function to the corporate security professionals report security, fraud and ethics violations (and all other matters that will potentially lead to investigations). These procedures have a positive impact on ensuring that the corporate security function receives full reporting of all appropriate issues and can adequately assign the appropriate resources. Such procedures also help prevent on-site human resources or business units from investigating themselves when the corporate security department, depending on the case, might be more appropriate.


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