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Internal Audit, Risk, Business & Technology Consulting

BUILDING A STRONG CORPORATE CULTURE BEGINS WITH MANAGING FRAUD RISK

Assessing the Results of the Latest White-Collar Crime and Fraud Risk Survey

Protiviti Dallas CPE DaySeptember 21, 2018

© 2018 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.

TODAY’S PROTIVITI SPEAKER

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Pamela Verick, Director

Protiviti Forensic

pam.verick@protiviti.com

+1.703.299.3539

FRAUD IN NUMBERS

© 2018 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 018 GLOBAL STUDY ON OCCUPATIONAL FRAUD AND ABUSE

A QUICK LOOK:

PROTIVITI’S WHITE COLLAR CRIME AND FRAUD RISK SURVEY RESULTS

© 2018 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.6

https://www.protiviti.com/US-en/insights/protiviti-fraud-risk-

survey?utm_source=blog&utm_medium=blog&utm_campaign=whitecollarcrimesurvey

© 2018 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.

WHEN IT COMES TO BUILDING A STRONG

CORPORATE CULTURE, “FRAUD RISK MANAGEMENT”

REMAINS A BIT OF A MISNOMER

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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.

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Our Key Findings

© 2018 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.

ORGANIZATIONS CONTINUE TO LAG IN EMPLOYING

LEADING PRACTICES TO BUILD A STRONG CULTURE

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© 2018 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.

RESOURCES REPRESENT A SIGNIFICANT

CHALLENGE IN BUILDING A STRONG CORPORATE

CULTURE WITH A CLEAR FRAUD RISK STRATEGY

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© 2018 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.

MANY COMPANIES LACK A FRAUD RISK

MANAGEMENT PROGRAM, INCLUDING POLICIES TO

MITIGATE FRAUD

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© 2018 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.

THIRD PARTIES REPRESENT A SIGNIFICANT GAP IN

FRAUD RISK MANAGEMENT

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DATA ANALYTICS, FRAUD AND THE PATH FORWARD

© 2018 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.

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

Responses)

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© 2018 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.

DATA ANALYTICS, FRAUD AND THE PATH FORWARD (CONT.)

If Yes: Who in your organization is responsible for the fraud detection program?

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© 2018 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.

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)?

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© 2018 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.

DATA ANALYTICS, FRAUD AND THE PATH FORWARD (CONT.)

How often does your organization conduct surprise audits within the organization?

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© 2018 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.

DATA ANALYTICS, FRAUD AND THE PATH FORWARD (CONT.)

Which of the following procedures has your organization established for the submission

of concerns by employees about questionable accounting or auditing matters?

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REPORTING, INVESTIGATION AND CORRECTIVE ACTION

© 2018 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.

REPORTING, INVESTIGATION AND CORRECTIVE ACTION

What level of involvement does your organization’s Audit Committee have in the

investigation of alleged fraud or misconduct?

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© 2018 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.

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?

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© 2018 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.

IN CLOSING

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• 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?

© 2018 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.