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How CFOs can maximize ROI on anti-fraud investment

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Man on elevator Fraud has increased during the pandemic, and the problem is getting worse. That was the key finding among more than 1,500 respondents to a survey conducted by the Association of Certified Fraud Examiners (ACFE) and Grant Thornton in April 2021. More than 50% of respondents reported that their organizations have uncovered more fraud since the beginning of the pandemic, and 71% expect the level of fraud to increase over the next year. “Anytime businesses make significant changes to operations, fraudsters see opportunities,” says James Ruotolo, a certified fraud examiner and a Fraud & Financial Crimes senior manager at Grant Thornton. “As businesses have and continue to revamp operations in response to the pandemic, that introduces a lot of opportunity for fraud to be committed.”

Helping CFOs maximize ROI on anti-fraud investment CFOs and finance executives understand and our responding to this threat. Almost 60% of respondents to Grant Thornton’s quarterly CFO survey, which was fielded in May of 2021, plan to increase anti-fraud budgets over the next year—with special focus on anti-fraud technology. Chart 1: CFO-Survey anti-fraud investment

The Anti-Fraud Playbook helps CFOs focus their fraud fight The Anti-Fraud Playbook, published by Grant Thornton and the ACFE, offers an effective game plan to help finance executives guide their organizations’ fraud detection and control efforts. This guide offers step-by-step guidance on:
  • Fraud risk governance—ethics from the top down
  • Fraud risk assessment—find fraud, define controls
  • Fraud control activities—build and deploy strong tools
  • Fraud investigation and correction—fight fraud fast
  • Monitoring fraud risk—staying ahead of fraud
But how can CFOs realize the best return on their anti-fraud investment? Consider these four steps:

  • Update your fraud awareness training. According to the ACFE, tips to ethics hotlines have historically been the most common way to identify occupational fraud. But as more workers have gone remote, those tips have declined. With fewer people are in the office, fewer people see questionable behavior in person. Organizations need to revamp fraud training to teach employees how to identify fraud threats and promptly report suspect activity, even when operating remotely.
  • Enhance your fraud risk assessment. New hybrid and remote work arrangements mean new procedures. For many organizations, internal controls have not kept up with these new work models, which increases fraud risk. Companies need to update their fraud risk assessments to evaluate their new environment.
  • Upgrade your anti-fraud technology. Among respondents to Grant Thornton’s quarterly CFO survey, 64 percent plan to boost investment in anti-fraud technology in the year ahead. Cyber-enabled fraud risks like ransomware, business email compromise and account takeovers were all increasing before the pandemic, and remote work models have significantly expanded companies’ cyber exposure. Strong anti-fraud technology and good cyber hygiene, like requiring effective passwords with multi-factor authentication, implementing a regular backup and recovery process, and maintaining timely anti-virus and patching protocols, can help.
  • Trust the fundamentals. There is no silver bullet to stop fraud, but there are helpful practices. The five pillars provided in the Committee of Sponsoring Organizations (COSO) fraud risk management guidance—strong governance, risk assessment, controls, investigation, and monitoring—will help your organization:

    • Have strong anti-fraud leadership and governance in place so that everyone knows their role.
    • Conduct effective risk assessments to understand the nature of your fraud risk and the effectiveness of your mitigation techniques.
    • Use strong controls to prevent and detect fraud while balancing a low-friction experience for your customers and constituents.
    • Ensure the use of proper investigation and remediation techniques when those controls fail.
    • Regularly monitor and report on your anti-fraud program performance and adapt to the changing fraud risk landscape.

Contacts:

Linda Miller Linda Miller
Principal
Advisory Services
T +1 571 444 1983


Erin Lentz Erin Lentz
Partner
Regulatory Compliance & Strategic Risk
T +1 704 632 3526


James Ruotolo James Ruotolo
Senior Manager
Fraud Risk & Analytics
T +1 860 781 6744