Reducing Fraud with Better Collaboration in the Workplace: Culture ...

Can you believe that it has been 100 years since US Supreme Court judge Louis Brandeis made his famous statement on transparency in business and government? Writing for Harper?s Weekly in December 1913, Brandeis asserted that ?sunlight is said to be the best of disinfectants?.

As the workplace becomes more virtual, geographically dispersed, and decisions are more decentralized, often technology helps us bridge the gaps. Chat, video conferencing, simple status or file-sharing tools are on the rise in all types of businesses. Transparent work, open communication, collaboration across processes ? not just good for employee morale but increasingly essential for fraud prevention.

There?s been a significant interest in adopting technology to support better collaboration, information-sharing and person-to-person communication over the last decade. Originally conceived as ?Enterprise 2.0?, we now hear terms like ?social business? or ?enterprise collaboration?. What this often means is using more online collaboration tools to facilitate more communication, more sharing, more engagement with colleagues as people ? not just as faceless boxes in the org chart.

But it is not just all warm and fuzzy kumbaya. Organizations that value team collaboration, shared responsibilities, knowledge/information transfer, and transparency into the decision-making process face measurably reduced risk of fraud. Let?s take a look at some of the key findings from the 2012 ?Report to the Nations on Occupational Fraud and Abuse?, published by the Association for Certified Fraud Examiners.

• Mandatory vacation or job-rotation policies are in place as fraud prevention in only 16.7% of organizations (no real change from 2010 survey). This is particularly problematic in small companies (less than 100 employees). Only 8% of companies with less than 100 employees have mandatory holiday policies, compared to over 20% for bigger companies.
• Mandatory vacation/job-rotation policies, when in place, helped reduce the amount of fraud by one-third ? a median loss of $100K rather than $150K in firms without such a policy.
• Frauds were detected twice as quickly in organizations that adopted job rotation/mandatory vacation policies, whistle-blower reward programs and surprise audits.
• Organizations took 9 months to detect fraud when job-rotation/mandatory vacation policies were in affect ? compared to 24 months in firms who did not.

No individual should ever be allowed to become a single point of failure. Cross-training and collaborating with colleagues up and down the org chart ensures that no one feels obligated to skip vacation, off-site training or professional development events. Employees who resist time away from their job may be at higher risk of attempting to hide fraudulent activities or careless work habits. Multiple sets of eyes on figures, procedures and communication help find problems or discrepancies much earlier in the cycle. Again from the ACFE Report:

• Over 18% of fraud committers were individuals who demonstrated control issues in the workplace, and refused to share duties.
• This number jumps to 24% for individuals in management or executive positions

The era of the lone wolf control freak may be coming to a close as businesses are compelled to go digital and mobile, become more distributed with remote working, and seek to attract the tech-savvy, collaboratively-minded next generation workforce. This era may also be coming to an end, simply because it is bad for business and the company bottom line when this behavior acts as a cover for internal fraud.

Better collaboration, more eyes on work processes, more open access to non-confidential information: all ways to reduce the darkness that breeds corruption and fraud in the workplace.

To learn more about fraud prevention and International Fraud Awareness Week (November 11-17), follow the #FraudWeek hashtag on Twitter, and explore the resources provided by the ACFE at www.fraudweek.com

This entry was posted on Thursday, November 15th, 2012 at 1:18 pm and is filed under ActiveData News Blog. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Source: http://www.informationactive.com/net/?p=3299

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