Jack Jia, Partner — Fraud Investigation & Dispute Services, EY Hong Kong.
According to the Association of Certified Fraud Examiners, the global annual fraud loss amounted to about US$3.7 trillion last year. We talked to Jack Jia, Partner — Fraud Investigation & Dispute Services, EY Hong Kong, to find out why organisations are still faced with fraud risks when fraud is not a new problem.
With more than 15 years of experience, Jia manages a team responsible for forensic data analytics, and is responsible for enhancing existing analytics methodology and developing new solutions. He has led EY's multi-location forensic data analytics engagements across the Asia Pacific (APAC) region and United States, including a review of trader communications and trades data using visual analytics and text mining to identify potential fraudulent trader behaviors. He also has extensive experiences in identifying fraud and abuse patterns in areas such as travel and expenses to proactively manage risk and save costs in the life science industry.
Executive Networks Media (ENM): Fraud isn't a new problem and there are technologies available today to combat it. However, fraudulent practices are still ongoing and might even be on the rise. Why is this so for APAC?
Jack Jia: While APAC organisations have tightened up their internal controls in response to increased regulations and enhanced local enforcements, anti-bribery/anti-corruption (ABAC) policies need to be more effective. Codes of conducts are not being followed and whistleblower programmes are either missing or underused. Our recent Asia Pacific Fraud Survey 2015 indicated a dramatic drop in the willingness among respondents to use their companies' whistleblower hotline compared to our 2013 findings.
At the same time, while many reported US Foreign Corrupt practices Act (FCPA) cases involved third party intermediaries, a large proportion of the respondents of our Asia Pacific Fraud Survey 2015 claimed that they do not fully grasp the extent of fraud, bribery and corruption risks posed by third parties. Besides that, they do not fully understand their responsibilities when it comes to economic and trade sanctions. Such lack of awareness or understanding adds risks to the value chain.
Since regulations are often said to be poorly worded and complex, do they really help businesses in fraud prevention? Besides relying on regulations, what should should APAC organisations do to combat fraud?
APAC organisations have tightened their internal controls in response to increased regulations and enhanced local enforcements. However, there is a need for these organisations to put in place the following measures to ensure the long-term sustainability of their compliance programs:
1. Strong ethical leadership: Compliance starts at the top: the organisation's leadership — from the board to the management — must engage proactively in compliance activities, demonstrate and communicate about ethical behavior. They must also ensure the organisation respond quickly and effectively to policy breaches, and support investment in compliance technology and training.
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