Fraud Risks and Prevention Strategies for Stakeholder Engagement
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14
th
September 2016
Outline
Definition of Fraud Risks
Role of Audit and Risk Function
The fraud triangle
Trends within NLC
NLC Fraud Prevention Policy and Strategy
NLC is there for you!
Definition of Fraud Risks
Fraud risks are defined as :
•
intentional act or omission designed to deceive others,
•
resulting in the victim suffering a loss and or
•
the perpetrator achieving a gain.
The elements of fraud risks are:
•
A representation about a material fact
•
Which is false
•
And made intentionally, knowingly, or recklessly
•
Which is believed
•
And acted upon by the victim
•
To the victim’s damage
Role of Audit and Risk Function
Amongst others:
Identify enterprise risks which
•
includes fraud risks by implementing sound fraud prevention
procedures and processes in line with PFMA requirements
and NLC requirements (Grant Agreements) and
•
implementing, monitoring and reporting on internal controls
that address those risks
G
R
E
E
D
When
GREED
overcomes fear,
FRAUD
prevails
Common Trends of Reported Cases
•
The use of fraudulent Annual Financial Statements
•
Unregistered Accountants and Auditors misleading the applicants
•
Service providers that purport to be NLC agents – charging fees
•
Submission of false information - on the application form, fraudulent quotations,
fraudulent invoices, falsification of progress reports etc.
•
Partnerships where the assisting and assisted organisation do not know each
other
•
Registering of assets on individual’s name and not the organisation’s name
•
Paying full amount of service to be rendered to service provider before any
service is rendered
•
Directly or indirectly giving kick-backs to NLC staff by applicants/beneficiaries
•
Misuse of funds and NLDTF funded assets
Policy statement and Strategy
•
The NLC holds a
ZERO TOLERANCE
approach towards fraud and corruption hence the
strategy to implement Preventative Controls and governance processes in ensuring
that fraud risks are effectively monitored and reported on
•
all incidents and reasonable suspicions thereof, are verified and investigated and
•
where appropriate, legal recourse to the full extent of the law is taken against
perpetrators and legal recourse amongst others include:
Disciplinary Action, Institution of Criminal Proceedings, Recovery of Losses and or
Civil Litigation
All recourse and actions shall be taken within the constitutional context in which the NLC
operates with due regard to the principles of developmental needs, fairness, and
administrative justice
“Audit and Risk gives
reasonable assurance
regarding
adequacy & effectiveness of internal controls, but we can
give you
ABSOLUTE
ASSURANCE
that if you are busy
committing fraud & corruption you will be caught one day”
What to do
?
•
•
PROCUREMENT INTEGRITY IT’S UP TO YOU If
•
How is NLC helping you?
•
Call 0800 012 013
I THANK YOU
This content discusses the definition of fraud risks, the role of audit and risk functions, the fraud triangle concept, common trends in reported cases, and the anti-fraud policy and strategy for effective risk mitigation and prevention.
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Post Indaba Stakeholder Engagement Anti-Fraud Awareness Audit and Risk Division 14thSeptember 2016
Outline Definition of Fraud Risks Role of Audit and Risk Function The fraud triangle Trends within NLC NLC Fraud Prevention Policy and Strategy NLC is there for you!
Definition of Fraud Risks Fraud risks are defined as : intentional act or omission designed to deceive others, resulting in the victim suffering a loss and or the perpetrator achieving a gain. The elements of fraud risks are: A representation about a material fact Which is false And made intentionally, knowingly, or recklessly Which is believed And acted upon by the victim To the victim s damage
Role of Audit and Risk Function Amongst others: Identify enterprise risks which includes fraud risks by implementing sound fraud prevention procedures and processes in line with PFMA requirements and NLC requirements (Grant Agreements) and implementing, monitoring and reporting on internal controls that address those risks
FRAUD TRIANGLE Opportunity GREED Rationalisation Pressure When GREED overcomes fear, FRAUD prevails
Common Trends of Reported Cases The use of fraudulent Annual Financial Statements Unregistered Accountants and Auditors misleading the applicants Service providers that purport to be NLC agents charging fees Submission of false information - on the application form, fraudulent quotations, fraudulent invoices, falsification of progress reports etc. Partnerships where the assisting and assisted organisation do not know each other Registering of assets on individual s name and not the organisation s name Paying full amount of service to be rendered to service provider before any service is rendered Directly or indirectly giving kick-backs to NLC staff by applicants/beneficiaries Misuse of funds and NLDTF funded assets
Policy statement and Strategy The NLC holds a ZERO TOLERANCE approach towards fraud and corruption hence the strategy to implement Preventative Controls and governance processes in ensuring that fraud risks are effectively monitored and reported on all incidents and reasonable suspicions thereof, are verified and investigated and where appropriate, legal recourse to the full extent of the law is taken against perpetrators and legal recourse amongst others include: Disciplinary Action, Institution of Criminal Proceedings, Recovery of Losses and or Civil Litigation All recourse and actions shall be taken within the constitutional context in which the NLC operates with due regard to the principles of developmental needs, fairness, and administrative justice
Audit and Risk gives reasonable assurance regarding adequacy & effectiveness of internal controls, but we can give you ABSOLUTE ASSURANCE that if you are busy committing fraud & corruption you will be caught one day
What to do ? http://www.ambassadoradvertising.com/static/uploads/news_blog_images/jennifer/dtrtlogo.jpg PROCUREMENT INTEGRITY IT S UP TO YOU If https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQc6hL90U__SFjJ3w6g46t38mdFsEapLRZ8AkzvC0mqwW-1T9kl How is NLC helping you? Call 0800 012 013
