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Fraud awareness must give way to anti-fraud education

By Clayton Thomopoulos

Fraud can cripple organisations and destabilise governments. It can be very hard to find and even if it is detected , it can be very hard to prosecute. Fraud experts know that prevention is the best proven defence against fraud.

In organisations this means employees are the first line of defence. When  employees are negligent or lack knowledge, this defence becomes vulnerable.

So how do we ensure that employees remain alert and vigilant with regards to potential fraud risks?

We need to create a culture where it is commonplace – in business and government – to create awareness and provide education about fraud risks. Employees and stakeholders should learn how to identify fraud and what to do in the event that it is identified. Any organisation with governance and ethics high on its agenda should prioritise the prevention of fraud.

The difference between awareness and education is fairly self-evident. Awareness is the general type of communication that one receives in the form of emails, posters, pamphlets and related material.

Fraud awareness drives within organisations have a role to play, but proper anti-fraud education takes this a step further and is a far more effective measure against fraud and corruption. With anti-fraud education comes increased employee knowledge and awareness.

The primary reason for fraud awareness being more prevalent than anti-fraud education is ease of distribution, costs and time constraints. An electronic message can be circulated easily and posters can be printed quickly. Pamphlets can be handed out together with ubiquitous items such as pens and rulers bearing a message against fraud. I just wonder if these messages on rulers, pens, posters or pamphlets really make an impact and how much knowledge  an organisation can convey on these items.  

The effectiveness of the traditional, old-fashioned mechanisms is waning and with the bombardment of communication that employees receive on a daily basis the rulers and pens have a place: in the desk drawer.
Whilst I understand that many companies simply cannot afford to have days out of the office for anti-fraud training for all employees, there are alternative delivery mechanisms. I know that face-to-face training and education, and loss of productivity because of time taken out of the office, can be costly. We live in a very competitive economy.

However, there is no excuse for organisations not to initiate ongoing anti-fraud education. When one considers the impact that fraud has on an organisation it becomes clear that the actual or potential financial loss may far outstrip the money spent on fraud education – and that’s only the financial impact. Other dangers of fraud – that few people consider – include weakened employee morale, waning investor or shareholder confidence, reputational risk and in some cases legislative sanctions.

There are a number of questions organisations and particularly the management need to ask themselves:

  • Are my employees in key positions able to identify specific types of fraud red flags relevant to their area of operations?
  • Would these employees know what steps to take should they detect or suspect fraud, without jeopardising potential evidence and resolution of the matter?
  • Are my employees aware of what types of situations may represent a conflict of interest?
  • Are the anti-fraud controls within the organisation effective and adhered to? Furthermore when were these controls last subjected to assessment?
  • Do we have a fraud hotline and if so do my employees know how this works and the process? Do they in fact know the number?
  • Are we at risk in terms of legislation such as the Prevention and Combating of Corrupt Activities Act and should we not have the processes in place to report instances of fraud, theft or corruption that fall within the reporting threshold?
  • Do I know the above? Do I know the hotline number?

The solution to this quagmire is simple:

  • Allow employees to complete their anti-fraud education at their own pace but make completion of the education modules compulsory.
  • Use online training modules. This not only eradicates the need for hours of continuous face-to face training, it allows employees the freedom to complete the training at the comfort of their desk over the course of a specific period. A significant benefit of online training is that the employees can now be tested and certificates issued upon successful completion of the education module. This also ensures that the lack of concentration experienced during a full day fraud awareness session is eliminated. Online training removes travel time and costs for presenters and the reach of this education mechanism is borderless.
  • Education modules can be customised for specific areas of the business and can include topics that are focused on the respective business areas’ core functions. This means the content will be more relevant and interesting to the employee doing the training.
  • Entity specific modules can instantaneously be deployed across various business divisions in a number of provinces and countries ensuring that there is a standard of anti-fraud education being adhered to across the operations. Personalised messages can be included from trainers or the organisation’s executives.
  • Employee induction could include mandatory completion of specified online training modules. Government entities could deploy policy and legislative related online training modules to employees as and when updates are applicable. Employees could study the module, take the test and confirm their knowledge and compliance.
  • The existence of an audit trail also allows organisations and governments to track levels of employee completion which bodes well in reinforcing a strong stance against fraud and corruption.

Compulsory anti-fraud education would typically include a myriad of related topics including ethics, corruption, theft, abuse of company resources and policy compliance. The beauty of online training is that there is very little standing in the way of an employee completing the required training.

Ideally employees should be required to complete a minimum number of hours of Continued Professional Education annually and a portion of this should include online anti-fraud education. In order to comply the employees would need to review the online content, answer test questions during the module and undertake a  test upon conclusion in order to be issued their certificate and comply with their employer’s CPE requirements.

This process not only raises awareness and education levels amongst employees but also provides an opportunity for employees to be rewarded for excelling and furthering their development. It is effective, measurable, agile and bespoke which will most certainly provide a return on investment.

My view is that the method of online anti-fraud education will soon be common place and we already have tools and services operational in this regard. Our team is very active in this area of development and we are currently developing customised online anti-fraud modules for both public and private sector.

Your employees will thank you for not bombarding them with more anti-fraud rulers and pens.

About the Author:

Clayton Thomopoulos is a director of Risk Advisory at professional services firm Deloitte. He is also a Certified Fraud Examiner (CFE) and formerly served on the Board of Directors of the South African Chapter of the Association of Certified Fraud Examiners and is a past President of the South African Chapter.

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