I am pleased to welcome to the PHorensically Speaking Podcast to the Compliance Podcast Network! The best practice for dealing with fraud is to prevent it from ever happening. This is PHorensically Speaking, where host Jonathan Marks will help you understand the forensic side of compliance so you can move from detection to prevention in your compliance program.

Episode-Collusion and Conflict of Interest in Compliance

Corruption can take many forms, but its root causes often include a conflict of interest and possibly some type of collusion. In this episode, we’re illustrating these concepts and how they intertwine, and what you can do to proactively make sure your organization is secure. Conflicts of interest can be problematic if not understood and managed appropriately. They increase the risk of bias and poor judgment, and usually never end well. When it comes to fraud risk management, Compliance and Internal Audit need to understand conflicts of interest and address them accordingly. All conflicts of interest must be documented in writing and make sure there is proper monitoring in place, so that your company is proactively dealing with these issues. Some of the key issues are:

a. Where there is collusion, there may also be a conflict of interest

b. Some common conflict of interest schemes

c. Activities that can create a possible conflict of interest

d. Code of Conduct

Episode-Freud and Fraud

On this episode, we’re putting Freud to fraud and getting inside the minds of crooks. Today’s white collar criminals have decades of technological evolution at their fingertips, creating new opportunities for fraudsters to inflict crippling loss to organizations. Which means it’s time to update and expand the elements of the traditional Fraud Triangle, to account for this new and vastly different world. We need to pay more attention to the human element of fraud. In doing so, we’ll understand fraud a lot better and be able to build more effective controls. Some of the key issues are:

a. The Fraud Pentagon consisting of the three original elements of the triangle are Pressure, Opportunity, and Rationalization; and adding Arrogance and Competence.

b. You must get inside the mind of a fraudster

c. What steps can you take now?

Episode-Setting the Right Tone from the top

The board of directors, in concert with the CEO and others, set the tone and conduct for corporate behavior throughout the organization, and is the most important element for promoting honesty in a company. In this episode, we’re talking about tone and conduct from the top. Corporate greed at the executive level has destroyed hundreds of companies. Many CEOs over the years have been sued over white collar crimes, and this sends a clear — though perhaps unintentional — message to their employees that committing fraud is acceptable, so long as it makes the company seem acceptable. That’s simply not the case, and is a prime example of setting the wrong tone and conduct from the top. At the same time, there are no regulatory rules or accounting standards that define exactly what the tone and conduct at the top should be. So we need to be mindful. When our companies are doing really well, we might slip into “Perfect Place Syndrome,” and all the hard work and effort you put into building a company culture that is mindful of ethical breakdowns could be wiped out in an instant.

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