Stan Gallo, 23 February, 2024
It’s been said that running a business is all about managing risk, and a culture of transparency comes from the top.
It should come as no surprise that corporate governance - particularly the roles of Boards and Executives - is a vital component of the framework of a robust fraud and corruption control system for your organisation. Boards must address more threats today than ever, including cybercrime, anti-trust competition, modern slavery, the global pandemic, corruption, insolvency, money laundering, fraud, and workplace misconduct.
A company’s ‘risk culture’ starts with the examples set by the Board and Senior Executive and therefore, creating and implementing a fraud and corruption control system is imperative to success. We recommend using the Standards as your blueprint for the future. Although Standards are not incorporated into law, they serve as an excellent source of reference, and organisations should be aware of what Australian Standards are and how their application can enhance business operations. The Standard is considered the benchmark for how organisations can mitigate fraud and corruption risks and is of particular importance to Boards and Executives.
In addition to the Standard, the four key areas outlined below are crucial to keeping your organisation's fraud blueprint on the right track.
1. Technology
It’s imperative to proactively plan for cyber-attacks and demonstrate resilience to information threats. Boards must understand exactly what data assets your company is trying to protect when aligning cyber security efforts across your organisation.
2. Transparency
A culture of transparency is critical for addressing fraud and corruption that, when left unchecked, erodes public and shareholder confidence in organisations. Boards can use a legal and regulatory roadmap to provide a framework that is effective and confidential when investigating whistleblower reports, yet be open with disclosures of findings. You should consider how transparency can be an effective business strategy for your organisation.
3. Tone-from-the-top
The Standard places the management of risks more squarely on the Board’s shoulders, with increased expectations to manage risk assessment, whistleblowing, process audits, and maintain communication with senior management on fraud and corruption. It’s incumbent on the Board to set up a ‘risk culture’ through robust risk monitoring and effective controls.
4. Trust in corporate governance
A mutual, reciprocal trust between a company, its customers and shareholders requires the same level of trust between the Board and Executives. The Standards can help your Board to fulfil its role of managing governance and risk with a critical weapon - a corporate culture of openness, trustworthiness, and transparency.
Learn more about mapping your organisation’s fraud blueprint for the future here. If you need assistance helping your Board understand their role in combatting fraud and corruption, contact BDO’s Forensic Services experts.
Is your organisation effectively implementing fraud and corruption control?
BDO has prepared a checklist with Boards and Executives in mind, designed to assist stakeholders in their understanding of their organisation’s current risks and controls, ensuring that the right questions are being raised and addressed.
Author
Stan is a Forensic Services Partner at BDO in Brisbane. He is a highly regarded risk specialist who combines proactive risk management, investigative and technology skills to assist organisations in aligning Governance, Risk and Compliance programs with their strategic objectives.