Safeguarding Assets From Fraud is a Global Battle

By Zafar I. Anjum

From a global perspective, economic crime is fast becoming a chief concern of business organizations worldwide. The global economic downturn has adversely affected the world's business climate and as a result, the risk of fraud and white-collar crime at the organizational level has significantly increased.  


First, I'd like to follow-up on my thoughts from my previous post and discuss the different elements of fraud. Business fraud is defined as any intentional act carried out against an individual or organization to steal assets (money, equipment, property) or improperly misrepresent an organization's financial position to deceive outside parties (investors, shareholders, etc.). This broad definition is manifested through a number of different criminal activities, including:

  • Asset misappropriation
  • Intellectual Property infringement
  • Money laundering
  • Embezzlement
  • Check and credit card fraud 
  • Online (cyber) fraud 
  • Tax and accounting fraud
  • Illegal insider trading
  • Bribery and corruption
  • Market fraud (involving cartels colluding to fix prices)
  • Espionage

The key to combating business fraud is first understanding the complexity of these crimes, knowing where the perpetrators of business fraud are found, and weighing the many costs associated with becoming a victim of white-collar crime. What's interesting is that, while fraud detection methods have improved markedly over the last decade, an incredibly high percentage of businesses worldwide have become victims of fraud in one form or another. (And according to recent studies, incidences of accounting fraud alone have more than tripled worldwide since 2003.) 

Sometimes fraud is committed as a result of financial pressures or in response to financial goals. Financial statement fraud can damage a corporation beyond repair, as happened to Enron in the U.S. ten years ago. Just last week, IBM Enron announced it was dismissing 24 employees for overstating revenues. The Times of India reported that "the overstatement was done by executives who were under pressure to achieve financial targets." According to the article:

The incident has put the spotlight on how senior executives are increasingly under pressure to demonstrate growth in challenging times, pushing them sometimes to resort to unethical accounting practices.

Indeed it has. As IBM India has no doubt learned, there is no "global" cookie-cutter method for investigating and detecting fraud that emanates from outside the organization. Their own internal policies failed them, as the fraud did not come to light until it surfaced in the media.

This is where fraud risk assessments can make an impact.

It's a proven fact that conducting regular fraud risk assessments throughout the business greatly decreases the incidences of fraud in an organization.

From an operational standpoint, a fraud risk assessment will help to identify weaknesses in the systems and controls surrounding the organization's financial operations. Effective assessments will expose vulnerabilities in the organization's various departments and functions while mitigating risks associated with all types of internal and external business transactions. Regular application of a fraud risk assessment will also force organizations to continually review risk management policies to ensure "checks and balances" are in place, and up-to-date detection and prevention procedures are constantly measured.

In my next blog post, I'll write more about the step-by-step methods an organization should take in conducting a fraud risk assessment and establishing the proper controls. 

Zafar I. Anjum, CFE, CIS, MICA, Int. Dip. (Fin. Crime), MBCI is Chief Executive Officer of CRI Group, a global supplier of investigative, forensic accounting, business due diligence and employee background screening services for some of the world’s leading business organizations. A Licensed Entity of the Dubai International Financial Centre, CRI safeguards businesses by establishing the legal compliance, financial viability, and integrity levels of outside partners, suppliers and customers seeking to affiliate with your business. CRI Group maintains offices in UAE, Qatar, Pakistan, Singapore and the United Kingdom. Email Zafar at