New Avenues of Fraud and need of Hardcore Internal Audit

Fraud have been associated with human psychology since very beginning. It is considered as an activity of few persons or group of persons who circumvent the controls to get the desired benefits illegally or immorally. It is not simply error or omission; it is done with intention to defraud the entity with culprit mind. In many Govt. and private organisations, it is done in a very organised way.

Recently we saw in newspapers about case of Anamika Shukla in UP, whose documents were misused by many different other persons to get the teachers job. They were not only appointed on fake documents but salary was also released. In case of Govt jobs document verification is also done. Now you can imagine that how many controls were by passed by organised criminals for years. Probably no KYC verification was done.

This is not a case of only one district rather multiple districts. Means how strong corruption system is working in Education Dept of UP Govt. Any way it is not only case of UP. Many scams and misappropriation have been done and modus operandi is same in all case. You may say it corruption or fraud or any name, they have a cost attached to it and it is harmful for all.

In normal course this type of fraudster’s works in close association and confidence of influential persons. They may be Head of Departments or other influential persons who can play decisive role not only in hiring but at disbursement level or document verification level too.

Some time ago we were informed that Aadhar card have stopped many crores fraud in govt. subsidy etc. This highlighted case has proved that how easily people’s integrity gets compromised and they innovate new ways to get their job done and all controls become mere formality.

This is not the isolated transaction. So many big frauds have been uncovered in past and will continue to be done. Learning is that no system is 100% perfect since human greed’s and selfishness will never allow eradication of frauds from industry or Govt. System.

In this case Govt need to get the detailed investigation done and bring the culprit behind the bar so that a strong message may be given to all concerned that any wrong activity ultimately gets uncovered and person concerned had to face its heavy cost. Simultaneously Internal controls like verification of documents from Board, KYC verification and internal inquiries need to be strengthened.

In case of Commercial Organisations Internal Auditing should be given due time and resources evaluate the existence of frauds. Most importantly Internal Audit Dept shall never be under the Finance Dept. since it not only restricts the independence but influences the objectivity too. Ultimately fraud have huge cost either actual or potential.

Any way such events are like catalyst for hardcore internal audit professionals. Now they shall definitely strengthen their tools and tactic in more efficient way.

Thank you

Happy Auditing