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Risk management tools can detect collusion, fraud

TERTIA BARRETT
Continuous monitoring affords a CFO greater control and allows him or her to proactively make decisions to prevent potential fraud

TERTIA BARRETT Continuous monitoring affords a CFO greater control and allows him or her to proactively make decisions to prevent potential fraud

18th April 2014

By: Schalk Burger

Creamer Media Senior Deputy Editor

  

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Collusion and fraud are often difficult to detect, owing to data potentially being manip-ulated to hide such activities in a company.

However, by using established international auditing best practices and software tools, as well as by playing an active role in risk management, a CFO can prevent such crimes from occurring, says auditing software firm CQS Technology sales and marketing head Tertia Barrett.

CFOs are legally liable for the statements that they sign, but often lack the instruments and capacity to interrogate any anomalies in statements and during reconciliations.

“An active CFO using suitable solutions should manage risks to the company on a monthly basis. This active role is important, as it changes risk management from being a yearly reaction and control strategy, with the associated damages already done, to a continuous monitoring and management regimen,” she says.

Suitable tools allow CFOs to identify, inves- tigate and mitigate fraud and collusion risks in a company and must be matched to a com- pany’s data aspects and requirements. How- ever, tools have been developed for and evolved in developed markets based on international best practices to reduce the potential of collusion and fraud.

The CQS governance, risk and compliance management software is such a tool, drawing on international best practices and standards to curtail and manage the risks of collusion and fraud in a company.

A CFO can run queries to determine various ratios and discover anomalous numbers across multiple business systems that could affect the company’s statements by using the CQS risk management tool. This enables a CFO to identify potential fraud and other risks, while measures to counter them should be implemented monthly, emphasises Barrett.

“The CQS solution contains the best practices from developed markets, such as the UK, the European Union and the US, besides others, and these best practices can be applied to queries. The solution will prompt a user to interrogate a specific set of interrelated numbers and calculate ratios between specific subsets of numbers to help them identify potential risks,” she explains.

The solution guides users step by step to ensure they focus on potential risk areas. It enables users to analyse all their data and guarantees data integrity. The solution automatically detects errors or potential control breakdowns across multiple business systems and delivers proactive alerts to business stakeholders throughout the organisation.

Continuous monitoring affords a CFO greater control and allows him or her to proactively make decisions to prevent potential fraud.

Companies should also consult with an auditing firm for guidance on compliance risks and other potential vulnerabilities. This includes dividing risk management into various segments, such as governance and risks, business performance and forecasting, tax compliance and financial reporting software to improve independence and detection.

“CFOs should consider the practices and the tools that will enable them to continuously ana-lyse, review and interrogate all business systems and financial reports, not only summarised ver-sions, to effectively identify and mitigate financial risks to the company,” she concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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