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Strategies For Defeating The Cheats Within

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Bill-Trueman

By Bill Trueman, CEO of fraud prevention consultancy UKFraud

With the recent high profile cases of senior fraud and online security managers being caught perpetrating fraudulent activity, there has been a degree of shock across the corporate world, combined with an initial feeling of helplessness. This is the worst thing that can happen in financial and banking organisations where one would expect the very tightest security to prevail. After all, if you can’t trust those executives in the most credible organisations who were specifically recruited to identify and counter fraudulent financial behaviour, then what can you do to ensure that your own organisation does not become a victim. The word victim is used advisedly, as internal fraud is not a victimless crime; rather it impacts in varying degrees on management, staff, shareholders and customers. Bill-Trueman

Any crime committed by those in a position of trust is far more serious, so the penalties should surely be far higher than normal. This is particularly true with fraud prevention mangers that cheat. However, it does seem that once an internal fraudster is caught, that any offer to ‘return funds in return for a leverage for legal plea bargaining should be disallowed. The ideal must be for companies to find ways to decipher and identify such practices and to eradicate them at ground level.

Still reeling from the shock of the media coverage of the latest betrayals, UKFraud asked its independent corporate fraud prevention SIG (Special Interest Group) to draw up a new set of benchmarks which will help organisations identify the signs that something is awry from ground level up. The SIG also defined and deciphered the most effective strategies for countering these risks. The Corporate Fraud Prevention SIG consists of leading fraud prevention consultants from across a range of industries, coupled with a wide range of fraud industry skill sets. The aim of the SIG is to analyse approaches taken to fraud in the corporate sector and to make recommendations for change at local, national and global levels.

According to the SIG’s research, the most likely signs of wayward behaviour by fraud and security management are relatively easy to spot and yet often overlooked. They include:

  • Fraud Systems that are below par. The fraud systems chosen by an organisation can be unfit for purpose and may not deliver what is required. There is also often an unwillingness, due to the influence of the internal fraudster, to consider competitive fraud technology products that do deliver or that can deliver more quickly. Often, the SIG says, it is easy enough with hindsight to see that a change to effective systems had been deliberately avoided, and typically, career minded employees are reluctant to blow whistles.
  • Erratic,  incomplete, late or excuse laden management and system reporting is a classic sign that line managers are covering something up and says the SIG, this is just as likely to be the case with those fraudulently managing the security and anti-fraud systems of a company. Normally, further investigation will reveal that ‘lip service’ and increasingly tenuous explanations are given assertively to thwart follow up activity. When though one is dealing with an errant fraud manager, these explanations are more difficult to see through and more than likely to pass the plausibility test. Often the blame for the cause of any suspicion will be thrown onto inadequate IT systems or on the political gaps between corporate silos.
  • Frequent excuses are often based around IT related issues, such as technology compatibility problems between different company systems or even between international systems.
  • Unexplained wealth of managers outside of work. There will be plenty of evidence of the rewards of wrong-doing with fraudsters purchasing luxury housing, wardrobes, holidays, cars and home computing equipment together with other rewards for family and friends which can even extend to private school fees for children.
  • Work place rumours, jokes and tip-offs. These are often dismissed as political jibes but often this is a tell tale sign that something is wrong and that staff are too afraid to ‘blow the whistle’ formally.
  • Frequent use of the ‘privileged rank’ of Security or Anti-Fraud Manager to divert questions or to avoid enquiries from those who might raise suspicion, such as the internal or financial auditors. This also includes the robust use of the ‘we don’t want to compromise security by answering your questions’ excuse.
  • Where fraud specialists know the latest trick, for example how on-line fraud works, the unique symptoms of that particular scam will show up in the company where the internal fraudster is using it themselves.
UKFraud’s Corporate Fraud Prevention SIG believes that ‘maintaining an independent review perspective managed by those with the greatest experience’ is the most effective solution for combating inside jobs by fraud and security management. Amongst the strategies the SIG would recommend are:
  1. A greater emphasis on the use of Non-Executive Directors. This is crucial, says the SIG, as usually Non-Execs are appointed for their experience of skills and operations in other organisations and sectors. They have that ‘other worldly’ eye that is able to cast a different perspective. They should have the ability to review all aspects of a company’s anti-fraud strategy and to ask awkward questions ‘from the top’ as this carries more weight.
  2. Up-to-date reporting must be a core mantra of good company management, with the details of repeated exceptions thoroughly investigated. Organizations should also ensure that reports are not only timely but that they are also complete, real and updated as required. These processes should also then be built into the internal audit schedule for checking. This in turn should feed into the main GRC (Governance Risk and Compliance) systems. In addition, wherever appropriate, organisations should adopt an enterprise-wide approach to technology as this will help with systems issues. Thus, if the technology works well in all other parts of an enterprise, it is highly noticeable if it fails in the management of the fraud department or the control of online and financial systems.
  3. From the ground up, organizations need to establish records both electronically and on paper. This should include specifying where documents are and when they should and should not be stored. One should identify who is in control of these systems, processes and procedures and who has ownership of specific records. Organizations also need to decide who is responsible for checking that these measures are followed. The scanning, and indexing of work needs to be carried out to professional standards and there must be rules to ensure that no-one can intercept/edit documents at an inappropriate stage or in a fraudulent way. It is also important, the SIG believes, to ensure that your storage capacity is controlled properly.
  4. Where acquisitions and mergers are concerned, organizations need to ensure that all documents are available and stored appropriately and securely, especially those that relate to IP protection, IP development records, audit trails and staff contracts. In particular, when acquiring a business, companies must make sure that they have indemnities and penalty clauses built into the acquisition agreements which relate to the availability of data, logs, audit trails and so forth.
  5. An extra fraud prevention ‘task-set’ should be drawn up for auditors and IT auditors whether they are internal or external. This can have a real impact, although sadly most auditors are simply there to either report on financial results or check asset lists and software licence compliance. There are though many specialists that can undertake ‘special’ tailored checks to find frauds within all manner of business systems including: payroll, invoicing or payments. By turning them towards checking the efficacy of the security and fraud systems in place, says the SIG, it is not only a greater deterrent but also a far more certain way of catching wrong doing whilst in flight.
  6. Getting HR more involved. This allows organisations to define responsibilities and handle warnings for non-compliance and to do so at all ranks from the ground level upwards.
  7. Organisations should actively consider the use of external risk consultants who can offer solutions which benefit from an independent viewpoint that resides outside of a company or   its politics.
  8. Where doubts exist, organisations should contemplate the use of private investigators to look deeper into the processes used by those who are deemed to be high risk people. These need to be the breed of computer literate investigators with corporate fraud experience.

A leading member of the SIF is Malcolm Gardner. Malcolm is the CEO of fraud prevention consultancy Freevision Ltd. He believes that the situation may be worse than many fear. In his view, “Typically, when fraud or security managers are caught, it is either because they went too far, having become complacent, or where there has been a tip off. This tends to suggest that those who are caught might simply be the tip of the iceberg. With sectors such as the online market, now so very tempting to fraudster, it can also be tempting for internal cheats too. Corporations need to be sure of their staff and need to put the right systems in place to help the loyal staff who are the ones still working for the good of the company.”

So to conclude it is especially negative situation whenever any fraudster is identified within a business as they are the person who has the responsibility for fraud prevention themselves. IT is a complete betrayal.  The first step in planning the fight back is finding these people and then managing the problem. The trouble is that many of them are exceptionally well hidden. Whether one can ever be 100% certain that there is no problem internally is probably too much to expect. However my belief,  is that if you start to introduce the kind of checks and measures the SIG has outlined, there is every chance that the risk will be minimised or driven away.

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Why hybrid working will shift the economy, not ruin it

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Why hybrid working will shift the economy, not ruin it 1

By Pete Braithwaite, COO at B2B self-service portal KIT Online,

Today explained that despite the major drive to get people back to the office, which the government has now U-turned on, the future comes in the form of hybrid working, which could make cities outside of London and Manchester have access to a larger pool of talent.

“When we’ve seen how well we can perform at home, the idea of going back into the office five days a week is a little unnecessary. Of course with some roles, including many in healthcare, working from home isn’t an option, some do not have the space or desire to work from home and others prefer the social and creativity aspect of working in the office, which is fine. But we can’t scare people to return to the office when they’re trying to protect themselves and their family’s health, and they can do their jobs perfectly well at home,” he said.

“The future is neither working from home or working in the office. It’s hybrid working, with the ability to work from anywhere. Being around people is what inspires some. For others, it’s nature. Who’s to say we can’t be productive by working in a retreat in the countryside so long as we have the right equipment and services to keep us connected? When people work at home during the day, the local shops, restaurants and entertainment venues in their immediate vicinity are likely to be positively impacted.  This could lead to a shift to a revitalised and more localised economy with employment spread more evenly rather than just in city centres.”

Pete Braithwaite

Pete Braithwaite

New remote-working technology has helped many companies to adapt easily to the new ways of working. Many national and international teams were already using video-conferencing software but this has become the day-to-day modus operandi for most successful teams now. Other companies have taken the opportunity to review their systems and ensure that they are fit for a more distributed workforce, investing in more portable devices that help employees work anywhere around the house and balance work with parenting. The move away from a desktop reliance has made lives easier.

“The fourth industrial revolution is much closer than we thought. I fully understand that the Government wants to breathe more life into our cities, but the genie isn’t going to go back into the bottle – working from home isn’t going to go back to being only when someone has a doctor’s appointment.

“Instead, there needs to be a blended way of working. Otherwise, the best people will leave for a business which is adapting faster.”

His comments come after some claimed the demise of the so-called ‘Pret economy’, whereby fewer people are going to cafes, shops and restaurants on their lunch and on their commute. But Braithwaite delves on the recent story of the CEO of Pret, who announced last week that instead of following businesses, they’re now following their customers.  Pret has adapted its business model, using Deliveroo to deliver at home and to students, selling coffee beans in Waitrose and, most radically, introducing a coffee subscription model.

“Successful companies aren’t downsizing, but instead they’re adapting. The future will be leaner and the economy will shift as people spend their money differently, such as in suburbs and on home renovation.”

Recent stats revealed that numbers of people spending in London’s suburban town centres have picked up fast, and small independent traders in towns such as Okehampton recently reported more customers through their doors, after a recent YouGov poll found 30% of consumers say they have used local retailers more since the pandemic hit.

“Cities won’t die, but well-paid workers, with the rise in remote working, could actually become less congregated in London, and spread themselves thinner, thus spending more in other locations. IT will need careful investment, and human interaction will still be King, but you don’t need to have one without the other,” he concluded.

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Stella McCartney Transforms Financial Consolidation And Lease Accounting With Board

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Stella McCartney Transforms Financial Consolidation And Lease Accounting With Board 2

Board revamps financial analysis, consolidation and reporting for luxury lifestyle brand’s IFRS 16 compliance

Board International, the leading provider of the #1 decision-making platform, has today announced that luxury lifestyle brand Stella McCartney is working with Board to transform financial consolidation and lease accounting.

Board is enabling the luxury lifestyle brand to automate financial consolidation from multiple locations worldwide, replace manual and time-consuming consolidation activities, model the impact of different scenarios on financial performance and achieve full lease accounting compliance with ease, for IFRS 16.

Stella McCartney is a luxury lifestyle brand that was launched under the designer’s name in 2001, with collections available in more than 100 countries and 53 freestanding stores including London, New York, Los Angeles, Paris, Milan, Tokyo, Hong Kong, Shanghai and Beijing.

“The Board platform’s ability to streamline our finance consolidation activities, whilst preserving the accuracy of financial data from Stella McCartney locations across the world and ensure IFRS 16 compliance, has been vital to the management of the brand” said Sandra Federighi-Oni, Chief Financial Officer, Stella McCartney.

“Board’s expertise in automating and analysing key financial reporting to obtain new insights, by simulating what-if scenarios adds a new dimension to our strategic financial planning,” said Federighi-Oni. “We can plan for future progress and model multiple scenarios to inform our decision-making, with a fully holistic view of our latest financial data and metrics and ensure all accounting calculations generated are IFRS 16 compliant.”

“In today’s fast-paced, data rich and evolving business environment, modelling for effective financial scenario planning, whilst ensuring the latest compliance is critical to compete,” said Gavin Fallon, Managing Director for UK, Nordics & South Africa at Board International.

“Board transforms financial decision-making, saving time through the automation of repetitive activities, creating full visibility of vital data, to enable the big decisions global

luxury brands like Stella McCartney make daily to thrive in today’s economy” continued Fallon.

Financial closing, financial consolidation, and other accounting activities require high levels of manual, repetitive work and the collation of data from a multitude of spreadsheets and data sources. These activities must also meet strict requirements in terms of compliance to corporate internal control systems.

IFRS 16 specifies how an IFRS reporter must recognise, measure, present and disclose leases.  Introduced in January 2019, this new standard will affect most companies reporting under IFRS and will have a major impact on the financial statements of lessees of property and high-value equipment. Under IFRS 16, if a company has control over, or right to use, an asset they are renting, it is classified as a lease for accounting purposes and, under the new rules, must be recognised on the company’s balance sheet.

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Can your company data make you famous?

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Can your company data make you famous? 3

By Kerry Gould, Associate Director, Speed Communications

Businesses gather and generate reams of data every day on everything from purchasing habits to customer behaviour. But too often, it gets ignored or restricted to ‘internal use’. Is this a big opportunity missed?

Perhaps more than in any other sector, finance and banking companies hold a goldmine of data. Of course, individual customer transactions are highly sensitive and need to be kept secure. But when these are collated into trends across an entire customer base, it can paint a compelling picture of people’s changing priorities. What are people spending money on? How are they using credit cards differently? Are they shifting their savings goals or looking at mortgages differently? And it’s not just consumer-facing businesses that can use their data to tell stories. It’s a growing area in the world of B2B marketing, especially for firms targeting the UK’s 5 million+ SMEs.

Insight in the COVID-19 era

Appetite to share data is increasing since the start of the COVID-19 pandemic, too. We’re already seeing companies step up and share this intelligence; barely a day goes by when there’s not a report on how people are changing and adapting. In an era when everyone is trying to be a ‘thought leader’, having this unique insight can really set a company apart and elevate its public profile.

There are some great examples out there. Barclaycard revealed in its SME Barometer that the number of small businesses actively taking payments has increased by 24 per cent since the start of lockdown, an indicator of recovery. Meanwhile, Bottomline revealed in its Business Payments Barometer that 89% of firms continued to pay its suppliers late and £164,000 was lost by the average mid-sized business to payment fraud.

These reports achieved media coverage in print and online, and likely to have been shared widely over social networks, been promoted in email newsletters, discussed in online webinars and provided talking points in customer meetings. In today’s multi-channel world, there are a plethora of ways to reach customers (and potential customers) and we know that a ‘layered approach’ to these communications stand the best chance of getting you noticed and remembered.

Commissioning a survey through an independent research agency is a tried and tested method for marketing and PR teams to gather insight to use for content marketing and news generation. But often, your company’s own proprietary data can be even more compelling. It’s based on actual facts and behaviours, immune from the public’s continually fluctuating opinions. Plus, it doesn’t cost you thousands of pounds to commission. If your company has a strong enough dataset that can tell a story or indicate a trend, it should absolutely be used.

Overcoming hurdles

Like all well-meaning initiatives, data-led PR doesn’t come without its challenges. Here, we tackle three.

  1. Getting buy in to go public
Kerry Gould

Kerry Gould

Sometimes, business stakeholders can be nervous about releasing data that may be deemed commercially sensitive, revealing market share or insight that competitors could take advantage of. In this case, it’s about considering risk versus reward. The marketing benefit for making yourself known could be offset by competitive intelligence that your rivals may have through other sources anyway. Ultimately, there’s often a compromise to be stuck and there may be some data that you can’t disclose. Bringing stakeholders on the journey with you from the start is often the best way to ascertain this.

  1. Organising reams of data

It can be overwhelming to organise complex data sets, gather trends from different silos, departments and platforms. Many finance companies have in-house data analysts and insight teams whose job this is, but for others, outsourcing to a specialist provider like Data Cubed or Beyond Analysis can be a helpful move. By building a dashboard that collates everything in one place, teams from across the business, and external PR or marketing agencies, can get access in real time.

  1. Not having enough data

It may be that your business doesn’t generate reams of data or lacks a large enough sample size of customers. In this case, you can partner with an organisation that does. In the Jobs Recovery Tracker developed with the Recruitment and Employment Confederation, we partnered with EMSI to tap into their database of live job vacancies. This helped to track the employment market amid COVID-19, generating masses of media coverage, insight to inform its content marketing and talking points for its upcoming REC 2020 conference.  This can sometimes be treated as a commercial arrangement but often considered a joint PR opportunity that’s win-win.

Data journalism is a growing discipline in the world of media, with news outlets dedicating talented people and resources to telling stories with numbers. The BBC and Guardian do it particularly well. With marketeers – particularly in data-rich industries like finance – waking up to the power it can hold for true thought leadership, the future is likely to be one ever more governed by data-led insight. How long before ‘data-PR’ becomes a discipline in its own right?

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