Fraud Risk Management

Transcription

1 RISK CONSULTING Fraud Risk Management A proactive approach to counter the risk of fraud and misconduct kpmg.ca/forensic

2 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member

3 Fraud Risk Management 1 A reputation for integrity is critical to safeguarding market confidence and public trust in your business. Unfortunately, fraud and misconduct can seriously undermine these efforts. That s why experienced business leaders are working to ensure that they have effective approaches to mitigating these risks. This is especially important in an environment marked by intense scrutiny and rising enforcement. Experienced leaders are asking themselves some fundamental questions. What are the fraud and misconduct risks we should be most concerned about? How do our risks differ across our business units, geographies and processes? How can we better leverage technology to see the early warning signs of fraud? What have others in our industry found to be effective? Instances of fraud and misconduct can negatively affect an organization by way of. Direct financial loss Undervalued stock prices Fines and litigation costs Impairments to goodwill Attrition of valued customers, employees and suppliers Adverse shareholder, media and community relations Detraction of leadership attention and resources from strategic objectives As organizations strive to achieve compliance with an array of new antifraud laws and regulations, management s agenda should be focused on: Understanding the risks of fraud and misconduct that can undermine their business objectives Determining whether their antifraud programs and controls are actually effective in reducing instances of fraud and misconduct Gaining insight on better ways to design and evaluate controls to prevent, detect, and respond appropriately to fraud and misconduct Securing an efficient and impartial reporting channel for whistle blowers Reducing exposure to corporate liability, sanctions and litigation that may arise from violations of law or market expectations Achieving the highest levels of business integrity through sound corporate governance, internal control and transparency. KPMG s Fraud Risk Management (FRM) services helps organizations: Prioritize efforts in areas where fraud is most likely to occur and where the monetary impact resulting from fraud is high Establish and manage a secure, efficient and impartial reporting channel for whistle blowing Reduce fraud loss; achieve cost savings or additional revenue accruing from fraud risk management activities Mitigate the risk of fraud loss and unethical activity in a focused and phased manner KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member

4 2 Fraud Risk Management Tailored to your needs Whether you require an assessment of fraud and misconduct risks, the design of an internal investigation protocol, or an evaluation of your entire program our services are designed to be targeted, scalable, and tailored to your needs. Fraud risk assessment Robust internal control mechanisms and an effective fraud response plan can assist with preventing and detecting fraud. We assist management in developing fraud prevention strategies by identifying risks and evaluating potential gaps in their control framework. Our services are aimed at helping clients in their efforts to achieve three core objectives: Prevent instances of potential fraud and misconduct from occurring Detect potential instances of fraud and misconduct when they do occur Respond appropriately and take corrective action when such potential instances arise. Fraud awareness workshops At times, operating management may either interpret red flags differently or ignore them completely. Being unaware, as a reason for non-compliance with laws and regulations cannot protect an organization from being prosecuted. We conduct fraud awareness workshops which are a practical and effective step that helps build a frontline fraud defense system. Tailored to your specific organization, participants learn to directly apply working concepts to situations with concrete, takeaway measures and tools to reduce fraud and promote an ethical environment. Employee fraud perception survey Employees are often the eyes and ears of senior management, and while many may encounter instances of fraud and misconduct, most may not know the best way to express their perceptions. Employee fraud perception surveys are a popular way to gauge your employees view on the current risk management programs and processes prevalent in your company. Such surveys can help the management become aware of their true strengths and weaknesses and help customize and improve their fraud risk management response. Predictive data modeling Organizations are seeking the best and most advanced techniques and solutions that can go beyond just detecting fraud. The challenge associated with recovering fraud losses makes it imperative that organizations prevent instances of fraud. Our services leverage predictive analytics to address these requirements and help in developing an early warning system. Through our data analytics tools, we can help create customized fraud response modules and dashboards, which can help organizations combat potential fraud and compliance issues by highlighting red flags in various processes and controls KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member

5 Fraud Risk Management 3 Forensic data analysis using KTrace Many of the indicators of potential fraud and misconduct, both actual and potential, reside within an organization s financial, operational, and transactional data. KPMG Forensic professionals use the latest data analysis tools and techniques to help clients identify these indicators. KTrace is an integral piece of the proactive forensic data analysis methodology used by KPMG Forensic professionals. This approach combines the latest sophisticated data analysis with our professionals in-depth knowledge and practical experience gained though fraud risk management assignments. In addition, KTrace incorporates publicly and commercially available information databases to help understand the veracity of critical organizational data. By tailoring KTrace to address the distinct risks and issues inherent in companies and their organizational data, we customize our approach and analysis to help address each client s particular risks, needs, and method of conducting business. Integrity survey tool Unlike the controls that surround particular processes or transactions, entity-wide controls that have a pervasive influence on the tone and culture of the business can be among the most challenging to evaluate. KPMG Forensic s Integrity Survey tool allows you to measure the control environment in key areas such as: awareness of company standards, pressure to engage in misconduct to meet business objectives, effectiveness of training, propensity to report concerns to management or through the hotline, consistency of discipline and accountability, and commitment to integrity exhibited by leaders, managers, and peers. Whistleblower Line Warren Buffet, Chairman of Berkshire Hathaway, a global investment firm once quoted Berkshire would be more valuable today if I had put a whistle blower line decades ago. Our whistleblower line service assists employees as well as third parties associated with an organization by providing them an independent conduit to report incidents of unethical practices. The line is managed by trained call handlers and not interactive voice response systems, thus helping ensure that a wide range of concerns are addressed. A mail box for hardcopy documents and a secure website are also available. While maintaining the whistleblower s confidentiality, we provide customized reports as per the needs of our clients based on their industry, approach and business KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member

6 4 Fraud Risk Management Our value proposition Vast experience We have insight from conducting high-profile investigations for clients under intense scrutiny in the wake of integrity breakdowns. Our in-depth understanding of processes and fraud risks across industries allows us to help organizations adopt an effective approach to prevent loss and dissipation of assets through fraud and misconduct. Forensic technology labs with dedicated teams We have forensic technology labs with teams that use specialized forensic data analytic tools and techniques to process large volumes of data. We use raw data from various source databases to conduct analysis, thereby remaining unaffected by any intermediate reporting/filtering mechanisms. Experienced professionals We have experience and multidisciplinary backgrounds from working with leading companies to establish ethics and compliance programs and related antifraud controls. Dedicated Industry professionals Our team comprises of professionals with in depth industry experience across sectors. We understand relevant control frameworks, industry practices, government enforcement policies, and practices that other companies have generally found to be effective and can apply this understanding to tailor our services to unique clients needs. Confidentiality We have stringent internal risk and guidance policies relating to client information. Proprietary Resources We have dedicated methodologies, benchmark data, tools and technology to facilitate efficient and consistent global service delivery. Our team also includes professionally trained and experienced investigators KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member

7 2014 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member

8 KPMG Forensic KPMG Forensic is a global network comprising of more than 2,600 multidisciplinary professionals from KPMG International s affiliated member firms. KPMG Forensic helps organizations in their efforts to achieve the highest level of integrity and to manage the cost and risk of litigation, investigations, and regulatory enforcement actions by assisting with the prevention, detection and response to fraud, waste, abuse and other forms of misconduct; the avoidance and resolution of disputes; and the collection, discovery and analysis of electronically stored information. KPMG Forensic (Canada) has offices and qualified forensic professionals throughout Canada, with major offices located in Halifax, Montréal, Ottawa, the Greater Toronto Area, Southwestern Ontario, Calgary and Vancouver. Contact us For more information, please contact your KPMG adviser or any of our senior Forensic professionals: Halifax Mary Jane Andrews (902) mjandrews@kpmg.ca Montréal Robert Castonguay (514) rcastonguay@kpmg.ca Stéphan Drolet (514) sdrolet@kpmg.ca Dominic Jaar (514) djaar@kpmg.ca Ottawa Victor Duret (613) vduret@kpmg.ca Greater Toronto Area Peter Armstrong (416) pearmstrong@kpmg.ca Kevvie Fowler (416) kevviefowler@kpmg.ca James McAuley (416) jmcauley@kpmg.ca Derek Rostant (416) drostant@kpmg.ca Southwestern Ontario Paul Ross (519) pross1@kpmg.ca Calgary John Williams (403) johnlwilliams@kpmg.ca Vancouver Suzanne Schulz (604) saschulz@kpmg.ca kpmg.ca/forensic The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Any trademarks represented in this communication are the property of their respective owner(s) KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.