Chief Marketing Officer at ERP Maestro
Don’t Let the History of Fraud Repeat Itself During COVID-19
Famed philosopher George Santayana said it best: “Those who do not learn from history are doomed to repeat it.” Although we have not been in this situation of COVID-19 before, what can we learn from the past that could help our companies now amid the current crisis?
According to a National Law Review article yesterday, “If history is any guide, financial fraud experts are about to become very busy.” Pointing back to the economic events of 2009, the article reminds us of how fraud spikes during periods of recession and how critical it is to have proper controls in place. Looking at preceding events and from what we know today, the increase of all fraud, and internal fraud at the hands of employees, will spike during this period of recession for four reasons:
- Fear – In times of uncertainty, especially economic uncertainty, people can be more motivated to commit acts of fraud in a quest for greater financial security. Job loss also provides another reason for rises in fraud, and we already know that far too many employees exit jobs without removal of access or take data with them.
- Relaxed controls – If companies are distracted throughout a crisis or lose valuable employees who monitor access risks, particularly with manual processes, the door is open for more fraud to occur.
- Remote work – When more employees are required to work remotely, as they are now, an increase in risk can occur when solutions are not in place to view risks virtually in a continuous manner.
- Nefarious actions – The adage “Never let a good crisis go to waste” rings true here. Unfortunately, those with malintent will also emerge with intensity during a crisis and take advantage of weakened safeguards and distracted gatekeepers.
Companies without automated controls or a way to quickly review access to financial business systems in place would do well to implement them quickly. As both of the above articles indicate, investors and regulating bodies will look much closer at controls and demand internal audits if company performance declines or is at risk.
Without question, this is not the time to be lax in your controls, and if employees who oversee manual controls need to be furloughed during this time, don’t risk a reduction in oversight that can be avoided with an automated solution that requires less employee time and effort.
Cost is a consideration during tight budgets, but you can implement and use tools that won’t put a drain on finances and that will actually pay off in the long run with protection from the activities that increase during a recession or crisis.
China, first hit with COVID-19, has already experienced major cases of fraud. In the most recent incident, a routine internal audit revealed that the employee conspired with external vendors to wrongly inflate sales by forging contracts and other documentations. Another company in China had a case of fraud involving $300 million just last week.
Some of the greatest advantages of ERP Maestro’s cloud solution Access Analyzer is its quick, no-cost implementation and freedom from future fees for upgrades and maintenance. Audit-ready reporting makes it easy to satisfy demands for visibility into active risks and for verification of controls.