41% of fraud risk management programs are fair or poor

To answer this question, Kroll in conjunction with the Latin American Foundation of Internal Auditors (FLAI) carried out a study in which 704 internal auditors from companies with more than 500 employees participated from all over the world.

Almost half of the participants expressed mistrust in the risk or fraud management programs of their companies. Specifically, the results showed that 41% of those surveyed rated the aforementioned programs as fair or bad. However, 35% thought they were good, 16.5% very good and 2.53% excellent.

Additionally, the investigation concluded that 41% of the companies declared that the area that leads the compliance or Compliance efforts is the internal audit. However, despite the fact that 91% of the companies declared that they have worked on fraud prevention, less than half answered that internal audit plays a decisive role when making decisions in companies.

The study It also reveals that one of the main reasons for not achieving adequate fraud risk management in a company can be caused by the lack of human resources trained for this purpose, as 80% of those surveyed stated that there was a lack of personnel to exercise these labors. In fact, it was striking that in 15% of companies whose payroll is equal to or greater than 50,000 employees, the internal audit department was made up of 15 people or less.

This trend is observed especially in Latin America, according to the document from Kroll, shows that there is a correlation between economic and employment pressures with the greater probability of fraud. However, they affirm that this can be corrected with the strengthening of the internal audit areas, and the hiring and official compliance training, since, in fact, 89% of the respondents indicated a good compliance program helps detect and prevent acts corrupt or fraudulent.

91% of the respondents, for their part, stated that they had at least some participation in the fraud risk assessment throughout the company. “In contrast to this, nearly half of those surveyed felt that internal auditing was not part of strategic decision-making across the company. This suggests that even though they may have some responsibility for fraud risk management, the function may feel that it does not have a natural seat at the strategic decision-making table or perhaps the leverage to drive change, ”warned Kroll. in the document.

Now, this whole panorama is striking considering that the economic recession that is looming in Latin America, with projected GDP falls of 9.1% in 2020 according to the World Bank, may become a preferred opportunity for scams and / or frauds to increase in companies, as often happens during this type of episodes.

Juan Cruz Amirante, Associate Executive Director of Kroll Argentina explained that in this context of crises are conjugated with greater frequency or ease certain factors that increase risk and exposure to fraud.

Among them, it is worth mentioning that they increase the opportunities for a person to commit It is a crime since the new working conditions may not yet have the necessary control and monitoring processes. This is due, according to Amirante, to the fact that the protocols of the compliance officers and the internal audit areas saw their work radically modified during the pandemic.