If fraud is suspected, it should be reported to either
- Your line manager
- Internal audit
- Director of finance
- Procurement or monitoring officer
- An external agency
A fraud response plan should be in place to help ensure that an organization responds to suspicious fraud-related activity efficiently and effectively, whether fraudulent activities have occurred. This plan acts as a checklist of actions/guide to follow in the event of a suspected fraud. Having a fraud response plan not only allows the management of an organization respond to suspected and detected incidents of fraud in a consistent and comprehensive manner, but it also sends a message that management takes fraud seriously.
A fraud response plan covers the following:
- The purpose
- Legal definitions of fraud and policies related to allegations of fraud
- Aim and objectives
- Dos and Don’ts
- Investigation process
- Internal reporting system
- Initiation of recovery action
- Confidentiality
Aims and Objectives of the Plan
- Prevent further loss
- Minimize and recover losses that have occurred
- Establish and secure evidence necessary for civil, criminal and/or disciplinary action
- Assign responsibilities for investigating the incident
- Determine whether to involve the police
- Review the reasons for the incident, measures taken to prevent a recurrence, and determine any action needed to strengthen future responses to fraud
Members of the fraud response team will vary depending on the facts and potential severity of the suspected fraud, but the team might include:
- A representative of management
- Legal counsel
- Finance director
- A Certified fraud examiner
- Audit committee members
- A representative of internal audit
- A representative of Human Resources
- IT personnel
- A C-level executive
Responsibilities of the Fraud Response Team include but are not limited to the following:
- Determine whether an investigation is necessary
- Determine who will lead the investigation
- Whether there is an immediate need for legal advice
- Whether there is an immediate need for police involvement
- If there is a need to notify the chair of the audit committee
- If there are additional resources to support the investigation
- Whether there is an immediate need for external, technical advice or support
Written by: Oreoluwa Adegoke, CFE