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How to avoid fraud

One Christmas present you can do without — make sure Santa fraud stays away this holiday season!

Employees tend to have their eyes off the ball during the Christmas season. Festive spirit and the extended holiday period provide an ideal opportunity for fraudsters to strike and we find that a significant number of frauds come to light in the new year.

Protiviti a risk consulting and internal audit group has developed 24 top tips for a fraud free holiday:

Before you go on your break

Think ahead

Arrange for key staff to be available or on call over the holidays to cope with unforeseen circumstances. Produce a schedule showing which members of staff are expected to work and give it to the security team. Ask them to report any unexpected people visiting the office, as well as late night or weekend working.
If possible, ensure at least one permanent member of staff is always present over the holiday period if you employ temporary staff in key areas such as security or IT.
Make sure temporary staff references and details are thoroughly examined and verified.

Strategy

Prepare a fraud response plan, with details of key advisers and other parties such as accountants, lawyers, police, insurers and bankers, so that you know what to do and who to contact if the worst happens. Produce a list for key personnel with their whereabouts, dates and telephone numbers so that they can be contacted in an emergency.
Ensure all key documents are adequately secured, with duplicated copies off-site.

Security

Let the local police station know if the offices and other buildings are to be closed and unattended. Do not solely rely on alarm systems.
Make sure any IT and security devices, such as server back up and video security, have sufficient storage media to last the whole holiday period. Ensure back-up tapes of critical IT systems are duplicated, with copies being maintained off-site.
Make sure that you have an operational disaster recovery plan.

Accessibility

Consider limiting access rights to key computer systems to essential personnel only. Consider disabling remote access to your IT systems over the holiday period, especially if you have no permanent staff monitoring access.
Remind staff to keep their eyes open for the unusual and report anything suspicious immediately.

Authority

Ensure the bank will not process transactions over a given amount without first obtaining authority from a senior member of staff (you may need to give your bank manager your home contact details).
Ensure someone with the appropriate authority level is always present to approve transactions. Don't let standards drop just because it is Christmas.
Do NOT pre-sign any blank cheques or authorisation forms to cover the holiday period.
Scrutinise any requests for "urgent" transactions. Query requests for unusual methods such as manual cheques and miscellaneous account coding.

Back to the office after Christmas

On return to the office, you should ensure the following things:

Accountability

Meet with the security team to learn of any unusual events and attendances.
Review telephone and fax logs for details of calls taking place at unusual times.
Follow up any unexplained absences from work. Fraudsters often make themselves scarce, for obvious reasons, immediately after committing the fraud.
Review any journal entries that have been processed in the previous month.

Scrutiny

Review changes to all master-files to ensure they are bona fide. Scrutinise systems access logs for unusual patterns.
Review all bank statements and perform bank reconciliations as soon as possible after your return. Ensure all reconciling items are valid.
Look out for severe changes in behaviour, personality and working practices. Concealing a fraud is stressful and the signs will soon appear.

Identity

Before all security settings are returned to normal, consider reviewing them for appropriateness in respect to the levels of access granted to staff.
Carry out a review of all security measures - both physical and electronic. Identify and investigate all breaches.
Listen to the grapevine. There is often an element of truth in office rumour. All allegations and suspicions should be thoroughly investigated.

Sean Holohan, Director of Business Risk at Protiviti, comments: "The festive season is an absolute dream for corporate fraudsters. Offices thin out, minds wander and business routine is put on hold. It's very worrying that the majority of businesses don't recognise and act upon these facts.

"There can be no worse way to start the New Year than to unearth a potentially crippling act of corporate fraud. Business owners and managers must start to consider fraud prevention in the same way we are all conscious of how to decrease the chances of burglary. When we go on holiday, we all follow a simple set of preventative actions (lock all doors, set the alarm, notify the neighbours etc.) and yet when businesses break for Christmas they remain blissfully unaware of the dangers until it's too late."

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