Forensic. Advisory.

Fraud

Examining the challenges of Managing the Fraud problem in Africa

How to cope with the continuing and emerging fraud scams.

Mustapha B. Mugisa, CFE, CEH
Fraud Examiner & Forensic Specialist.

How much money do you estimate Africa loses annually to fraud?

In which ways is it lost?

Forensic. Advisory. Fraud

Image credit, ACFE.com

Research
An average organization loses about 5% of its annual revenue to fraud, ACFE Report to The Nations 2012.
ACFE Uganda survey in 2011 revealed banks & telecoms lose 15-25% of annual revenue to fraud!
Africa 2011 GDP in US $

1,880 million

The cost of fraud to Africa

94 million!
Thats a combined GDP of 25 African countries at Forensic. the bottom! Advisory. Fraud

Fraud
In any organisation, small proportion of staff act dishonestly

Fraud by false representation

Causes loss to the entity & Abuse of The act is gain to the position intentional fraudster. of trust
Forensic. Advisory. Fraud

Common fraud schemes

Corruption
Asset Misappro priations

Conflict of interest Bribery Fraudulent Academic Credentials

Purchase schemes

Bid Rigging Fraudulent Reports

Kick backs

Expense reimbursements

Improper disclosures

Common corruption schemes...

(i) bribery, (ii) extortion and (iii) conflict of interest.

How Occupational Fraud is Committed

Occupational Frauds by Category Frequency

7 2012 Association of Certified Fraud Examiners, Inc. Source: ACFE.com

Asset misappropriation schemes, in which an employee steals or misuses the organizations resources (e.g., theft of company cash, false billing schemes or inflated expense reports) is the most common.
2012 Association of Certified Fraud Examiners, Inc.

The burden to Uganda due to high fraud

Forensic. Advisory. Fraud

Why fraud is a growing problem in Africa?

The bigger picture Limited of integration of compliance within the governance structures

Reactive

rather than

Proactive

Top four challenges

12

#1: Weak support

Small budget to anti-fraud efforts Lack of right skills and tools Culprits are usually highly connected
13

Cases like this would go free!

#2: Conflict of interest

Double life of corporate officers

Some public Servants operate two different lives the private/public sector challenge
14

#3: Top at the top

A complicated scenario merit vs. skill! Law of the jungle rules

Power corrupts. absolute power corrupts absolutely.

15

#4: Absence of correct data

Fraud by its nature is clandestine i.e. hidden

16

Insight
What are the values of Government? How do the Public Servants live by em?

Forensic. Advisory. Fraud

Seven elements of fraud

prevention
Code of ethics

Fraud Prevention Policies

Communication & Training

Fraud Risk Assessment

Monitoring

Response plan

Ownership
Forensic. Advisory. Fraud

Code of Ethics
(Honest)

Ethics
Would you tolerate liars? Is your integrity for sale?

Forensic. Advisory. Fraud

Unethical behavior

Ethics
Are you ethical?

Title of your presentation

People

Forensic. Advisory. Fraud

Policies
(Entity specific)

Fraud policies
Can you state your anti-fraud policies simply? Do they provide for fraud reporting and anonymous whistleblowing?
Forensic. Advisory. Fraud

Tipping tops all...

Method Tip/ whistleblowing system Management review Internal audit By accident Account reconciliation Document examination
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Effectiveness 40.2% 15.4% 13.9% 8.3% 6.1% 5.2%

Forensic. Advisory. Fraud

Insight
Why does fraud and corruption continue despite good laws in Africa?
Any ideas?

Forensic. Advisory. Fraud

Your Decision
What is your personal ethical credo?
Forensic. Advisory. Fraud

Forensic. Advisory. Fraud

Q&A
Thanks for your time
Mustapha Mugisa, CFE, CEH, CISA, MBA, CPA, CrFA Forensic specialist & fraud examiner 0712984585, mmugisa@summitcl.com

Title of your presentation

www.summitcl.com

Summit Consulting
Forensic. Advisory. Fraud

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We specialize in digital forensics, IT security, risk management and fraud prevention.

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