Navigating the complexities of fraud prevention and detection in your organization is critical. In this episode, host Anne-Marie Henson is joined by Alan Mak, Partner and National Leader of BDO's Forensic Disputes & Investigations, and Mary Mathews, Partner in BDO's Accounting Advisory Group. Drawing from their expertise, they delve into the pervasive issue of fraud in today's financial landscape, discussing current trends, examples of fraudulent activities ranging from small-scale employee expense frauds to larger procurement frauds, and the psychological and societal implications of fraudulent behaviour. Discover key insights into the indicators of fraud in financial statements, the role of auditors in detecting fraud, and practical strategies for implementing effective controls to mitigate fraud risks.

What you'll hear in this episode:

[1:35] An update on the latest fraud trends and status.

[2:11] Explanation of the fraud triangle.

[4:15] Examples of fraudulent activities.

[5:57] Examination of types of fraud and occurrences across different company sizes.

[8:25] The psychological aspects of fraud.

[13:17] Indicators of fraud in financial statements and the role of auditors in detecting fraud.

[17:10] Strategies for reducing the risk of fraud.

[23:15] Reflection on the societal perception of fraud and the need for robust consequences for perpetrators.

Mentioned:

Anne-Marie Henson

Alan Mak

Mary Mathews

BDO

Quotes:

"Fraud is one of those things that is very personal, even when it's a big company. And the reason why is because fraud inherently involves trust."

"As auditors, we have to meet high professional standards, a financial statement audit doesn't actually serve as a guarantee against any fraud or detecting fraud."

"It starts with good governance in place... putting in checks and balances to reduce those opportunities and the risks of fraud where opportunities might exist."

"We look at the world through one of several ways in terms of risk assessments for fraud, and a common framework that we use is something called the fraud triangle."

"Perform reconciliations with the right level of detail and attention... doing it thoroughly, properly, reviewing budgets to see how performance is going."

"The fraud triangle lists three elements that are necessary in order for frauds to exist or to occur. They are opportunity, rationalization, and motivation."