This document summarizes a seminar on fraud risk management and prevention techniques. It discusses: 1. Key principles of fraud risk management programs including fraud prevention, detection, escalation, investigation and correction. Fraud prevention techniques include preventive controls like HR procedures and authority limits. 2. Detection techniques that should be established like whistleblower hotlines and process controls to uncover fraud when prevention fails. 3. The importance of whistleblower protection plans, outlining why systems fail without anonymity, a supportive culture, clear policies and effective communication. 4. Legislative frameworks for whistleblower protection vary by country but most have legal protections and financial incentives to report fraud.

1. ACCA-IIA Singapore Seminar Part 1
• Part 4 Fraud Risk Management
• Leveraging your internal control process to
prevent and manage internal fraud
• Tuesday, 6 October 2015
• 9:00am – 5:00pm
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2. Principle 3
Prevention techniques to avoid potential
key fraud risk events should be
established, where feasible, to mitigate
possible impacts on the organization.
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3. Key Principles
3
Fraud Prevention
• Preventive controls
 HR Procedures
 Authority Limits
 Transaction-level
Procedures
• Documentation of
prevention techniques
• Assessing the effectiveness
of prevention techniques
• Continuous monitoring
1. Fraud Risk
Management
Program
2. Fraud Risk
Assessment
3. Fraud
Prevention
4. Fraud
Detection
5. Escalation,
Investigation
and Correction

4. Principle 4
Detection techniques should be
established to uncover fraud events when
preventive measures fail or unmitigated
risks are realized
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5. Key Principles
5
1. Fraud Risk
Management
Program
2. Fraud Risk
Assessment
3. Fraud
Prevention
4. Fraud
Detection
5. Escalation,
Investigation
and Correction
Fraud Detection
• Detective Controls
 Whistleblower
Hotlines
 Process Controls
 Proactive detection
procedures
• Documentation of detection
techniques
• Assessing of the
effectiveness of detective
controls
• Continuing monitoring

6. Fraud Prevention (1)
Prevention Detection≠
• Procedures
• Policy
• Training
• Communication
• Activities
• Program to identify fraud
(past + present + future)
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7. Fraud Prevention Source (4)
First Line of defense
• Communicating the existence of Anti Fraud Procedures
• Making staff aware that crimes does not pay
• Real + enforceable against perpetrators
• Serve as strong deterrents control
• Proactive Fraud Fighting measure
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8. Fraud Prevention Source (4)
• Communicating to outsiders and insiders that the
organization is committed to preventing and
detecting fraud
• Internal Control System comprises of many rules and
procedures aim to address inherent business risks
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9. Fraud Prevention Source (4)
Fraud Prevention Controls
Proactive measures
Designed by management and staff
To address all identified risks
Design + Implement Control Activities
Techniques used are adequate
to prevent fraud According to organization’s risk tolerance
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10. Whistle Blowing and
Protection Plans
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11. • Encouraging employees to come forward and
report suspected incidents without fear
• Forming independent hotline for reporting
suspected incidents of fraud or misconduct
• Establishing confidential fraud reporting
mechanisms
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12. Why Do Whistle-Blowing Systems
Fail?
1. Lack of Anonymity – The FEAR of retribution
2. Culture – Remember it is set by those at the top of
the organization,
3. Policies – If it is not clear what is unacceptable
conduct then reports won’t be made.
4. Lack of Awareness – It must be communicated
effectively and reinforced.
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13. Mr. Kyle Lagow is the Whistle-blower in
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14. • Lagow had filed a suit against his former employer,
subprime mortgage lender Countrywide Financial, alleging
appraisal fraud. Countrywide has since been taken over by
HSBC.
• Lagow's portion of the pact with the US Government was
worth $75 million. He received his cut -- 19 percent of the
total. Taxes and legal fees come out of the $14.5 million.
• His reward was one of the larger ones among recent
finance related whistle-blower cases.
14

15. • The settlement has brought Lagow financial
security and a measure of redemption. But it
was a long, hard path.
• Even after his travails, he fears little has
changed in the mortgage industry.
• Source: Reuters
• (Editing by Dan Wilchins and Leslie Adler)
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16. Legislative
Framework
USA UK Australia PRC Singapore HK
Legal
protection
Employee
Y Y Y Limited Limited Limited
Financial Y N N N N N
Witness
Protection
Scheme
Y Y Y Y Y Y
Comparison of major jurisdictions
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17. Whistle-blower
• An officer
• An employee
• A contractor or their employees who has a contract to supply goods or services
Protection
• information provided to SAIC in confidence remains confidential
• victimisation of whistle-blowers a crime.
• civil and criminal liability for making the disclosure exemption
Qualified Receivers
• Australian Securities and Investment Commission
• Auditor / member of audit team
• A director, secretary
• Senior manager
Protection of Whistle-blowers in
Australia
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18. Protected Disclosure
• Any person authorised by the company to receive revelations
• Must give their name
• Have reasonable guards to suspect contravention of corporations Act or ASIC Act
• Act in good faith
Source
• Information Sheet 0052 (INFO 0052
• http://www.asic.gov.au/asic/asic.nsf/byheadline/Protection+for+whistleblowers?op
enDocument
18

19. Definition of
Whistle-blowing
• Making a disclosure in the public interest
Whistle-blower
• Worker
• Believes malpractice in the work place is happening or has happened or will happen
• Reveals information of the right type (“qualifying disclosure”)
• Reveals to the right person in the right way (“protected disclosure”)
UK Framework
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20. Qualifying Disclosure
• Criminal offences
• Failure to comply with a legal obligation
• Miscarriage of Justice
• Threats to an individual’s health and safety
• Damage to the environment
• A deliberate attempt to cover up any of the
above
• Must not break the law in order to make a
disclosure or legal professional privilege
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21. Protected Disclosure
• Made in good faith
• Reasonably believes the information is substantially true
• Reasonably believes that they are making the disclosure
to the right “prescribed person”
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22. Dismissal or Victimisation for whistle-blowing
• Can claim unfair dismissal
• Can claim detrimental treatment
Recommended
Code of Practice
• Public concerns at work
• An independent organisation
• www.bsigroup.com
• Developed by public
• Concern at work at collaboration with British standards
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23. Main features – Whistle-blower Policy
Safeguards
Purpose
Confidentiality
Harassment or
Victimization
Anonymous
allegations
Bad Faith
Allegations
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24. Main Features- Whistle-blower Policy
Process for
Raising a
concern
Procedure (1)
TimingReporting Evidence
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25. How the Report of Concern
will be handled
Procedure (2)
Further Information
Initial Reports
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