Except for those companies whose job it is to fight it, fraud is a very dirty word. And unfortunately, it’s everywhere, in every company of every size, every industry and every locale. The Network’s recent Quarterly Corporate Fraud Index reports that fraud reporting is at a near all-time high. But how can that be? Governments are more involved in regulation than ever before, and still more legislation is on the way. Are we just an ethically-poor society? The knee-jerk answer is “no,” followed by a pause, and then, “maybe.”
In a recent interview with Compliance Week, Tim Mohr, a partner at BDO Consulting (the firm that verifies the statistics reported in the Fraud Index) really summed it up well: “It’s not necessarily that fraud is increasing with regulations in place. It’s that the regulations are allowing for fraud to be discovered in a more timely fashion.” Tim’s point is all about the difference in fraud and fraud reporting. Fraud is bad, but fraud reporting is good – well, yeah, if you look at it that way, sort of. If companies make their employees aware of an ethics hotline and the procedures to follow, and if policies are in place and well-communicated, fraud reporting means that employees are getting involved to help fight their company’s battle against the evil foe. But then again, it also means that fraud is still there, at work, present and accounted for.
“Accounted for.” That’s critical. That same Compliance Week article stated that the DoJ has raked in almost $13 billion dollars in the last 30 months in their fight against fraud. And, Congress is at it again, with new legislation just introduced that would ostensibly give the DoJ more fraud-fighting money and more fraud-fighting superpowers while making fraud investigation more transparent and accountable.
What it all means is this: Fraud is alive and well and living comfortably in an enterprise near you. But those companies who are willing to put on their super-tights and stand up to fraud, to establish and maintain a strong, vibrant ethical culture, those companies can look at fraud and fraud reporting numbers knowing that they are winning the fight and are using what they learn from watching fraud do its evil work. Using hotlines, awareness programs, training and metrics, those companies are accounted for, and they’ll be fine.