It cannot be understated how much of an impact digital transformation has had on the financial sector. However, while many argue that the changes have been overwhelmingly positive in terms of bringing in new and faster digital payment methods, there has undoubtedly been a dark side to the rise of technology as well.
New technology such as generative AI, deepfakes and speech bots are empowering fraudsters to create synthetic identities or bypass traditional identity verification checks.
According to research, fraud is costing businesses and individuals in the UK £137bn ($189.8bn) each year. As highlighted by Crow UK head of forensic and counter fraud services Jim Gee: “The amount lost to fraud in the UK alone outweighs the wealth of Jeff Bezos, while the amount lost to fraud globally represents more than twice the UK’s entire GDP.”
In this article, we will be discussing six key strategies that your accounting firm can employ to strengthen fraud prevention and detection.
6 Strategies for Fraud Prevention
As highlighted above, fraud has a vast financial impact not just in the UK but worldwide. According to a report by LexisNexis, APAC (Asia Pacific), merchants have been battling a “significant” number of fraud attacks, with digital fraud attempts, in particular, increasing by over 50% in the Philippines during the last year.
With this in mind, let’s focus on how you can help to detect and prevent fraud in your accounting firm.
1. Create a culture of transparency
Creating a culture of transparency and accountability within your accountancy is essential. Employees of all levels should feel comfortable reporting suspicious activity and have the ability to do so anonymously. In addition, employees should have a genuine belief that their reports will be taken seriously by their senior management and the relevant personnel.
2. Form a strong code of conduct
As a regulated financial institution, you must have a clear policy on what constitutes fraud and a substantial punishment and deterrent for those who carry out fraudulent activity. In order to increase compliance, it’s essential to involve your employees in the ethics creation process and ensure that your policies are updated in line with new technology.
3. Implement effective internal investigative procedures
Once fraud has been suspected or reported, it is essential to conduct an investigation immediately to identify the source. While the procedures you wish to choose are entirely up to you, it’s important to be thorough in your investigation in order to minimise loss and reputational damage.
4. Train employees to detect fraud
While technology is often used to commit fraud (especially external fraud), it can also be used to detect and prevent fraud as well. There are a number of software programs on the market which can be used to identify and highlight suspicious activity.
5. Data analysis
Data analytics is not just for comparing internal performance or marketing purposes. If used correctly, data analysis can be one of the most effective tools in combating and preventing fraud from occurring in your accounting firm.
By using a combination of data analytics and visualisation, data-literate members of your team can look through raw data to find unusual patterns or activities that would lead to preventing and detecting fraud.
6. Eliminate weaknesses
As we highlighted at the start of this article, technology is making fraud both easier to conduct and harder to detect. In order to strengthen fraud prevention and detection with your accountancy, therefore, your business must embrace technology and improve cyber security, login procedures and other areas of weakness that fraudsters use to their advantage.
Protect your business and clients with INAA
By employing these strategies in your accounting firm, you can ensure that your business is in the best position to detect and ultimately prevent fraud.
Here at INAA, we’re on a mission to help professional accounting firms deliver best-in-class services worldwide.
We aim to make global business personal and encourage all of our members to collaborate and drive the conversation on accounting and auditing developments.
If you’re interested in finding out more about the current trends within the accounting industry, be sure to take a look at what INAA can do for you. Apply for your membership today.