Vigilance vital to mitigate corporate fraud

Being vigilant and taking proactive measures are of vital importance in mitigating a rising trend of corporate fraud which affects corporates in Sri Lanka and in many other countries.

This was the common view of several corporate leaders and forensic professionals at an evening discussion that CMI Sri Lanka Branch organised with their knowledge partner KPMG, at the Cinnamon Lakeside recently.

President, CMI Sri Lanka Branch, Rohitha Mendis spoke on the thoughts behind selecting this theme for the evening forum in his welcome address.

Managing Partner and Country Head, KPMG in Sri Lanka, Reyaz Mihular who moderated the discussion said that many people have a wrong conception that they are fully protected and would never fall victim to fraudulent incidents. He was of the opinion that more often than not, it is such people and their organisations that are exposed to the highest risk, since they may ignore early warning signs and thus fail to take adequate precautions.

Country Director, Asian Development Bank, Ms Rita O'Sullivan, Managing Director, Sampath Bank, Aravinda Perera and Managing Director, Lanka Walltiles, Mahendra Jayasekara and, Partner-Head, Risk Consulting and Forensic of KPMG in Sri Lanka, Jagath Perera took part in a panel discussion thereafter, led by Reyaz Mihular.

Ms Rita O'Sullivan said it was very important for organisations to have good governance structures and follow high ethical standards, so that they could minimise the potential risk of fraud. She emphasised the need to encourage whistle blowing where people can report incidents of perceived wrong doing in confidence without having to worry about the adverse consequences they may have to face as a result.

Aravinda Perera, shared his views on the need to take prompt action when a fraud is suspected. He spoke on the consequences that organisations and society at large would face if fraudulent incidents were ignored and fraudsters were treated too leniently. He stressed the need for good independent systems in identifying genuine grievances and said that organisations should be fair, confidential and effective in their responses.

Mahendra Jayasekara, shared his experiences about how the manufacturing industry could tackle these challenges.

He said that management intervention must be minimal or ideally none at all so that perceived incidents can be reported directly to the highest levels of the organisation and acted upon.

He said that people with stronger competencies would be more capable of committing fraudulent acts and while competency is essentially important, organisations must also seriously assess honesty when recruiting people.

Jagath Perera, in his presentation, 'Zeroing in on fraud - is enough being done?' shared an overview of the types of frauds that are currently experienced and red flags or warning signs which might alert organisations of potential frauds.

BBC