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Utilizing Peer Reviews for External Quality Assessments

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Family/Friends. Relationships severely tested. Range of emotions ... Possible increased legislation or watchdog interest. More onerous (costly) compliance ... – PowerPoint PPT presentation

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Title: Utilizing Peer Reviews for External Quality Assessments


1
Russell Third, Director Internal Audit,
Department of Labour
2
Session Overview
  • The Ripple Effect
  • Who is affected by fraud?
  • What can you do?
  • How fraud hurts you and you organization (Video)
  • Questions

3
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6
The Smartest guys in the roomIf you have not
seen this movie get it out or buy it (29)It
shows the effect on the people of Enron and those
associated with it.
7
65 Billion
24 days
0 Bankrupt
8
(No Transcript)
9
Enron quite a ripple!!!!
10
The Ripple Effect
Public/Stakeholders
Auditors
Supplier/Contractors
Senior Management
Fraudster
Fraud
Family/Friends
Colleagues
Management
Legislator interest
11
Fraudster
  • Confused
  • Scared
  • Realisation of the effect on the innocent
  • Possible loss of freedom

12
Family/Friends
  • Relationships severely tested
  • Range of emotions shame, distressed, angry
  • Innocent victims who will suffer (sometimes for a
    long time)
  • Kids at school

13
Colleagues
  • Sense of betrayal morale plummets
  • Similar emotions hurt, violated, anger
  • Blame
  • Can I trust anyone?
  • Possible realisation of red flags
  • I never noticed that gap

14
Management of area where fraud occurred
  • Extra work
  • Concern about control gaps
  • What allowed it to occur?
  • Was I responsible?
  • How do we fix it?

15
Senior Management
  • Extra work and costs
  • Ensuring a robust investigation
  • Managing reputation/political aspects
  • Making sure the cause is identified
  • Ensuring fixes occur

16
Supplier/Contractors
  • Trust
  • Doing business with you
  • May be the subject of jokes
  • If collusion, negative effects on both

17
Public
  • Reputation
  • Shareholder/Stakeholder confidence
  • Possible lack of investment
  • Call for greater accountability
  • heads must roll

18
Hurricane Katrina
  • Hard done by stories many were total lies
  • Bogus phishing websites (Mirroring Red Cross for
    example)
  • Homes being deliberately damaged to get more help

19
Legislator interest
  • Possible increased legislation or watchdog
    interest
  • More onerous (costly) compliance
  • Increased focus for auditors

20
What can you do now?
  • Good control environment - strong tone from the
    top
  • Well designed and imbedded controls
  • Methods to know they are (or are not) working
  • Right people (and you checked previous
    employment), right jobs

21
What can you do now?
  • Keeping good people reward, recognition,
    training
  • Clear organisational approach to wrong doing -
    zero tolerance
  • Clear, well communicated policies and procedures
  • Robust investigation procedures

22
Post fraud Management need to
  • Understand and deal with morale issues
  • Understand the financial situation
  • Plan how to get out of the mess
  • Communicate with staff - including the
    consequences of committing fraud
  • Ensure vulnerabilities and systemic holes are
    closed

23
For you - get good advice
Need to investigate thoroughly (and sometimes in
the background)
Natural Justice Peoples Rights
Getting the right balance
24
Human Resources and Legal
  • Ensure you brief them early
  • Get someone working alongside you giving good HR
    and Legal advice
  • If you dont - potential Personal Grievance or
    worse, the clearly guilty get off (and are paid
    for their trouble)

25
Communications
  • Internal and External Communications
  • Consider up front in your Fraud Policy how you
    will deal with issues
  • Involve Communications staff early
  • Positioning advice scenarios and responses

26
Internal
  • Privacy Act used by some to say nothing
  • My view
  • Be up front with staff
  • Tell them what happened - general, not a how to
    discussion
  • Reinforcing what is, an is not, acceptable
  • Lessons learned

27
External
  • Outcome e.g. sentencing
  • Focus on fixing the issues
  • Stakeholders can have faith in the organisation
  • Rebuilding credibility

28
Dealing with fraud
  • Think about it before it occurs have robust
    processes in place
  • Deterrence
  • Detection (including how you report suspicions)
  • Investigation doing that quickly and
    sensitively
  • Dealing with the aftermath

29
Remember An ounce (gram) of prevention is better
than a pound (kilogram) of cure
30
How fraud hurts you and your organisation
Certified Fraud Examiners and AICPA
31
Questions?
32
Acknowledgments
  • Certified Fraud Examiners and AICPA How Fraud
    hurts you and your organisation.
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