Anti-fraud compliance programs

Can they make significant difference to fraud risk management

Although fraud impacts all organizations alike, the repercussions of fraud in case of small businesses can be far more devastating than what is felt by large organizations. For starters, small organizations run the risk of losing key customers who may contribute significantly to their operations. Further, the cost of managing reputational damage and legal proceedings can be extremely detrimental to the future of the company.

Traditionally, the importance of anti-fraud compliance programs has taken a back seat at small businesses in their efforts to focus on growth and customer acquisition. However, recent incidents of fraud have prompted regulators to view the absence of formal anti-fraud compliance programs as akin to non-compliance, resulting in larger fines/penalties for incidents of misconduct.

To successfully mitigate the impact of fraud, it is necessary for small businesses to invest in building an anti-fraud compliance program. Such a program should include anti-fraud policies and procedures, reporting mechanisms, training on these policies and procedures, and regular awareness creation efforts.

Besides helping organizations comply with regulatory requirements, anti-fraud trainings have also shown to have a direct impact on the ability to detect and respond to fraud early, consequently losing much less (financially) to fraud. According to the Association of Certified Fraud Examiners Report to the Nations on Occupational Fraud and Abuse, 2016, companies with anti-fraud training programs were able to detect fraud 40% sooner and lost 50% less to fraud than companies that did not focus on training.

Lastly, anti-fraud training programs also present an opportunity for organizations to communicate their values—of ethics, integrity and fair practices—to employees, thereby improving employee morale and reducing attrition.

Small businesses wanting to invest in training programs today have several options, including web based e-learning solutions that cost significantly lower than classroom based sessions, while providing flexibility to employees to complete the training when convenient. Leading e-learning providers today can provide in-built trackers, auto-generated reminders, and completion statistics that can be shared with the senior management/regulators etc. as documented evidence of anti-fraud efforts.

You can read more about the importance of anti-fraud compliance programs here.

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Authored by: Rohit Mahajan, Partner, Deloitte India and Sushmit Bhattacharya, Director, Deloitte India

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