What The Fraud!

In view of the recent national spotlight on corruption, Group Internal Audit decided to take on fraud as the key topic for our annual workshop this year.

Participants from various corporate functions and subsidiaries gathered for the half-day interactive workshop to gain insight about topics such as fraud statistics and trends in today’s business environment, perpetrator profiles, root causes and motivators for fraud, Internal Audit’s role in preventing and detecting fraud, and future trends in fraud.

Overall, global surveys today show a worrying upward rise in Fraud – this was supported with surveys conducted by big accounting firms such as PwC (from data gathered from more than 7,200 respondents across 123 different territories). Likewise, for Malaysia, the latest survey conducted by PwC Malaysia reveals that 41% of Malaysian companies reported experiencing economic crime in the last 2 years. With huge amounts of money being lost through corruption, companies including CMS need to beef up their defenses to keep this serious problem in check.

Potential red flags and internal control activities were also highlighted during the session for the following functional areas such as:

  1. Sales and Marketing
  2. Procurement
  3. Human Resources
  4. Information Technology
  5. Finance

In addition, the Group Internal Auditor also provided a prelude to the Malaysian Anti-Corruption Commission Amendment Act 2018 that was  gazetted on 4 May 2018 and highlighted how this new amendment would significantly affect organisations as a whole. One key rationale for this amendment is to plug an existing loophole in the Act concerning gratification or bribery i.e. to extend the net to haul in commercial organisations and those charged with governance for any fraud committed by persons associated with the organisation.

Hence, this amendment has far-reaching consequences as it extends to companies, their directors and senior management in addition to the person/s charged with bribery or corruption. Fortunately, a 2-year moratorium is in place to give time to organisations to prepare themselves while guidelines on what constitutes adequate defense procedures will be issued by the Ministry in due time. For more information, please visit the SPRM website at http://www.sprm.gov.my/.

Business case studies and interesting real-life fraud cases that occurred in both Malaysia (e.g. Maminco, Protasco) and globally (e.g. FIFA, Olympus and Enron) were shared and discussed during the workshop.

Overall, it was an interesting half-day session as participants were able to expand on the points learned and shared their real-life experiences and thoughts willingly. Not forgetting the scrumptious tea-break and lunch that were served!

Contributed by: Group Internal Audit