Applying Standards to Control Fraud and Corruption
02 December 2021
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Professor Paul Andon from the University of NSW School of Accounting, Auditing and Taxation recently joined McGrathNicol’s Forensic Practice Consultant Dean Newlan to discuss how organisations can leverage Australian standards to better control fraud and corruption.
In June 2021, the third edition of the standard was released as AS8001-2021. The objective of the standard is to provide minimum requirements and additional guidance for organizations wishing to develop, implement and maintain an effective Fraud and Corruption Control System (FCCS), which replaces a Fraud and Corruption Control Plan, through initiatives aimed at preventing, detecting and responding to fraud and corruption events.
While the standard is not compulsory, there are minimum requirements which must be met by organisations wishing to comply. Some of the key changes include:
Updated definitions for fraud / corruption (conduct is now not necessarily illegal)
Updated guidance in relation to preventing, detecting and responding to external attack, particularly a cyber-born attack
Introduction of the concept of ‘pressure testing’ for internal control systems
Upgraded guidance in relation to whistle-blower protection and misconduct reporting channels
Introduction of requirements and guidance in relation to the capture and analysis of digital evidence.
During the webinar, Dean advised participants that as a first step, organisations should undertake an honest and independent benchmark of the standard against what is currently in place. This will result in the organisation identifying gaps and then implementing a strategy to close those gaps.
Paul discussed that in addition to the standards and controls organisations implement, consideration should be given to the way in which the controls operate to identify potential cues that precipitate offending. In this regard, Paul informed the participants that he considers fraud offenders rationalise their actions not by simple explanations but by crafting broader narratives for themselves, including context about the issues individuals are facing and how they feel about it. Paul argues that despite standards, if an organisation does not have integrity in their operations, this can assist the offender in developing and supporting their narrative.