Fraud Risk: Your Company’s Leader Could Expose Risk
A company may already have an anti-fraud system or internal control, but this does not guarantee that fraud does not occur. There are factors that cause anti-fraud measures to not work effectively. Based on the results of the Indonesian Fraud Survey, the main factor for weak internal control is the lack of good tone from the top (27.6%).
The role of the leader is very important for the company in implementing anti-fraud measures because they would be the person who has access and control to all elements of the anti-fraud system. With their power, they could ignore the anti-fraud system and if this continues, it will become a poor corporate culture that will be challenging to be changed.
Internal control and tone from the top
Internal controls and the tone from the top are analogous to a vehicle and fuel. Without a good tone from the top, it is most likely that internal controls will not function effectively, such as the case of Toshiba and Jiwasraya.
A good tone from the top can be demonstrated by the obedience of top leaders to the company’s code of ethics and anti-fraud policies as well as their willingness to consistently communicate these two things to the management and employees.
Train employees to be at the forefront of anti-fraud
A leader who realizes the importance of a good tone from the top in the efforts to prevent fraud will certainly also realize the importance of employees as the front guard against fraud. Therefore, they will communicate the code of ethics and anti-fraud policies to their employees by providing training.
Training for employees aims to make them aware of matters related to fraud, whistleblowing reporting mechanisms, procedures and ethics. One of the advantages of training is that it helps companies to control audit costs and reduces the time for external auditors to assess fraud. Canary® Whistleblowing System
Integrity Indonesia, through the Canary® Whistleblowing System service provides clients with various reporting channels that are user friendly and secure. We recognize that effective communication is one of the keys to a successful whistleblowing system. Therefore, we assist our clients in educating and communicating about the whistleblowing system to their employees by providing training and media kits.