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Forensic line - fraud prevention and detection tool


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Fundamental controlling tool of fraud prevention and detection designed for company owners and top management. Protect at work and in business those honest against those unfair.

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Forensic line - fraud prevention and detection tool

  1. 1. Fraud and unethical behavior prevention and detection tool. JOZEF HALÁDIK MD, Haládik Consulting, s.r.o.
  2. 2. How to obtain information about rising corporate fraud?
  3. 3. Data for Czech market, source: 2011 PwC Global Economic Crime Survey Facts 27% of companies is subject to fraud 38% of companies suffered by loss over CZK 2 mil. 71% of fraud was committed by employees
  4. 4. Forensic Line Security, independence, anonymity. Forensic line will become integral part of your control environment. Forensic line is primarily for benefit of those who are interested in long term operation and profitability of the business. Those are usually shareholders, owners, corporate governance bodies and top management. Line benefits Security Recently, 27% of companies were subject to the fraud activity. This number represents only discovered fraud. Estimate says that in real this number can be easily doubled. In other words, every second company faces fraud activity, mostly committed by their employees. Prevention Forensic line represents easy and effective tool not only for the reporting any fraud suspicion by employees, but also a strong tool for the fraud prevention. Responsibility Recent development of Companies act and other relevant legislation make management more and more responsible for the right set up of control environment. Independent Forensic Line represents strong part of the control environment. Localization Such tools are common in the international corporate environment. However, insufficient localization has significant impact on its efficiency. Forensic line provides not only multilingual use, but also support of legal compliance for every selected country. Line parameters Anonymity Anonymity is one of the key attribute to encourage individuals to make a report. If the Forensic Line was not anonymous, you would hardly get any report. Independence Strongest part of the control environment comes from principle of independence. Reports obtained from independent provider are free of any internal influence and misinterpretation. Privacy Privacy and misuse protection of any report is guarantied by Law firm. It is also guarantied that any report will be used in compliance with the law and will not be used to harm any client interest or ethical rules. International methodology Methodology of the reports collection, evaluation and privacy is compliant with International Standards for the Professional Practice of Internal Auditing as issued by The Institute of Internal Auditors.
  5. 5. Filings directly from source: Employees, suppliers, customers. Fraud, unethical behaviour, misinterpretation.
  6. 6. How it works Haládik Consulting Privacy and independence is guarantied by Haládik Partners, law firm Sources of filings Forensic line Reporting Employees Filings collection and regular reporting: Categorization Prioritization Case genesis Statistics Innocence presumption Strictly confidential Protection against defamation Advanced data security Suppliers Customers Web pages Protected internet interface accessible from PC, Smartphone or tablet Call centre Anonymous telephone line for verbal filings and choice of online follow-up Ultimate Beneficiaries Funders, Shareholders and Investors Corporate Governance bodies Internal Audit, Supervisory Board Management Tom management and Statutory representatives Investigation anonymity independence security Fixed Box Sealed box located at client office for submission of hardcopy filings
  7. 7. Tool for owners, management and corporate governance.
  8. 8. Implementation We guarantee implementation of the Forensic Line within 30 working days from contract signing. This includes training of key management personnel, customization of website and telephone line and proposed implementation of internal and external communication. Line customisation and set-up •  Choice of input channels •  Localisation and language customisation •  Reporting tailoring and directing •  Incorporation to existing processes and controls Staff trainings •  Training for key management personnel focused on identification of fraud and unethical behaviour •  Presentation of forensic line operation and key information about purpose of the line to all employees of the organisation Internal and external marketing •  Proposed internal and external marketing •  Use of company’s existing communication channels •  Proposed presentation of corporate responsibility •  Regular communication and findings presentation setup
  9. 9. Benefits of Implementation Cash Benefits case study 50% As an average company I have at least 50% chance to be subject of fraud. 50% Having Forensic line implemented, I can reduce fraudulent activities or discover fraud with at least 50% chance. CZK 2 million is estimated annual fraud value to the company. By implementing Forensic Line typical company can save at least: CZK 500 ths. Other Benefits Saving of additional cost incurred if fraud is committed (layers fee, etc.) Avoidance of insurance company resistance to cover fraud cost if appropriate control environment is not implemented. Fulfilling management legal obligation to set control environment preventing and discovering fraud Use for benefit of company’s PR in corporate responsibility report.
  10. 10. Significant tightening of strict liability of statutory representatives according to the new Act on Corporations and Insolvency Act in combination with the new regulation in criminal law places great emphasis on improving and streamlining internal business controls. Insurance of statutory representative is no more protection against employees crimes and in the worst case scenario can be due to crime of employee company convicted to a penalty of forced liquidation. Legal Environment Criminal liability of legal persons § 8 (1) an offense committed by a legal person is an unlawful act committed in its name or on behalf of or in the course of its activities, also by an employee or person in a similar position in the performance of work tasks. Exclusions statutory representatives The insurance does not apply to claims arising from: b) committing any criminal or other intentional fraudulent act or willful dishonesty of the insured person.
  11. 11. Credentials International company with 270 employees in the Czech republic and turnover over CZK 720 mil. Several instances of fraud discovered in misuse of employee benefits. Cases spread over more than 4 years. Loss of CZK 2,7 mil. Marketing agency with 30 employees in the Czech Republic. Fraud committed through conflict of interests and sale of own products over period of 5 years. Estimated loss of CZK 10 mil. International pharmaceutical company with turnover over CZK 1 billion. Discovered trading of with foreign currency outside of company’s rules and Corporate Governance rules. Loss of CZK 37 mil. International production company. Discovered fraud committed by misuse of employee benefits. Loss of CZK 270 ths. In two years International company with 75 employees in the Czech republic. Discovered cheating through the public tender. As a result, company is now on black list for public tenders. Estimated loss of CZK 50 mil.
  12. 12. Are you interested in forensic line? Do not risk, prevention is really important. Call us on: +420 603 466 473
  13. 13. What else? We can offer you more. Follow up and additional services provided by our specialists: Support or outsourcing of internal audit function Based on Forensic Line analyses and using our know-how we will review your internal audit plan and we will suggest relevant changes to the plan. Proposal for changes of control procedures We are prepared to offer you not just one-off but also systematic solution of issues identified. We will analyze status and reasons of possible fraudulent activities and we will analyze and suggest systematic changes to your control environment and processes to avoid such an activities in the future. Forensic audit We are ready to investigate filings obtained and independently collect relevant documentation. Individual cases resolution For individual cases we will prepare for you optional scenarios and suggest you steps to resolve and close these cases.