4 Internal Control Measures that could Reduce Fraud Risks
Has your company implemented strong internal control measures? If not, then you should be worried as your company is likely to be exposed to fraud risks that can reduce your investor’s trust.
According to Report to the Nation 2020, lack of internal control is a major factor in the cases of fraud, amounting to 32%. The report also proved that companies that implement control measures have fewer fraud losses, 1 time less than companies that have no control — and also a faster fraud detection time.
The following are the top 4 internal controls according to ACFE in Report to The Nation that can minimize fraud losses with shorter detection times:
- Code of Ethics
The existence of a code of ethics can show that company leaders have a high commitment to running an ethical business. This commitment is also handed down to their subordinates. In addition, the code of ethics also helps companies to comply with applicable regulations to avoid illegal activities – one of which is fraud.
- Internal audit department
The role of internal audit is to carry out fraud risk management stages such as providing adequate knowledge about fraud or considering fraud risks when evaluating indicators for fraud.
- Management certification for financial statements
Certification is needed to improve professionalism to reduce fraud, especially fraud in financial statements, which is the most common type of fraud.
- Management’s review of internal controls, processes or transactions
Management also needs to monitor and review the internal controls that occur in the company so that fraud is increasingly difficult to do.
To help evaluate the internal control system, Integrity Indonesia, through the Canary Whistleblowing System, provides reliable whistleblowing services for clients of various business backgrounds. With case management services, Canary offers a combination of several reporting channels that are centered on the website application. This increases the accessibility of our clients to the report, while ensuring the reporter’s anonymity. For more information about the Canary Whistleblowing System, don’t hesitate to contact us.