From CGMA Magazine: Risks remain as companies combat fraud


Fraud poses a serious risk to any business. While progress is evident on some fronts, many organizations still need to improve systems and procedures to prevent, detect, and respond to fraud. Coverage in CGMA Magazine in recent months has highlighted the journey toward better fraud prevention.


Use of electronic payment methods and a range of fraud mitigation strategies have coincided with a drop in payments fraud over the past year, according to a global survey of companies conducted by the Association for Financial Professionals.

Sixty-one percent of the 625 financial professionals who responded to the survey said their organization experienced business-to-business payments fraud or attempts at payments fraud in 2012. That’s 12 percentage points lower than in 2009, when reports of fraud and attempted fraud reached a nine-year high.

Eighty-four percent of organizations reported that their paper payments are decreasing and electronic payments are increasing. The move to electronic payment methods has the potential to improve payments fraud risk controls. Although corporate use of checks has declined, checks remain by far the most common targets of fraud, according to the survey.

“Organizations must remain vigilant since fraudsters are constantly exploring newer and bolder ways to perpetrate fraud as payments options continue to evolve,” Nancy McDonnell, managing director of survey sponsor J.P. Morgan Treasury Services, said in a news release.

To defend against attacks on security credentials, companies are performing daily reconciliations (76%), reviewing and strengthening internal procedures (68%), and ensuring that disaster recovery plans include the ability to continue with strong controls (50%).

Read the full story, “Electronic Payment Methods Help Decrease Payments Fraud,” by Ken Tysiac.


U.K. businesses are increasing coverage of fraud risk. But challenges around data analysis, staff training, and a lack of routine risk assessments remain, according to a study from Deloitte. Forty percent of internal audit functions said they do not regularly use data analytics, and 38% said their teams do not have the skills or knowledge to do so, according to the report, The Internal Audit Fraud Challenge: Prevention, Protection, Detection.

“The major challenge facing organizations is reviewing how they store and hold data,” Deloitte forensic technology partner Jarrod Haggerty said in a video statement. “By getting their document management strategies right, they can vastly improve the quality of their real-time transactions monitoring.”

The report revealed that only half of organizations carry out routine fraud risk assessments—which Deloitte describes as the most efficient and cost-effective way to prevent fraud. “Failure to undertake fraud risk assessments on a regular basis will make it difficult for internal audit functions to determine how to effectively focus key and sometimes limited resources on the areas of highest risk,” said Michael Jones, a partner in Deloitte’s enterprise risk services practice.

Deloitte forensic partner Nic Carrington said companies continue to face skills gaps in their investigation capabilities. “Evidence handling and interviewing skills were two important areas which were highlighted as needing improvement,” he said. “These two areas are core and central to any investigation. Failing to approach witness and suspect information in the right way will mean that critical information is lost and key facts missed. Gather evidence or data incorrectly, and any employee proceeding or court action could be prejudiced.”

Read the full story, “Finance Teams Require Better Data Skills to Tackle Fraud,” by Arvind Hickman.


For strategies on detecting, preventing, responding to, and deterring fraud, download the CGMA report Fraud Risk Management: A Guide to Good Practice.

Jack Hagel, editorial director
CGMA Magazine

CGMA Magazine is published online at in conjunction with the Chartered Global Management Accountant designation, which was created through a partnership between the AICPA and CIMA. The magazine offers news and feature articles focused on elevating and emphasizing management accounting issues.

Where to find February’s flipbook issue

The Journal of Accountancy is now completely digital. 





Get Clients Ready for Tax Season

This comprehensive report looks at the changes to the child tax credit, earned income tax credit, and child and dependent care credit caused by the expiration of provisions in the American Rescue Plan Act; the ability e-file more returns in the Form 1040 series; automobile mileage deductions; the alternative minimum tax; gift tax exemptions; strategies for accelerating or postponing income and deductions; and retirement and estate planning.