By David Gnanadass Ag Chief Internal Auditor, Malaysia Airlines

Transcription

1 FRAUD PREVENTION OR CONTROL TECHNIQUES By David Gnanadass Ag Chief Internal Auditor, Malaysia Airlines

2 Agenda Promoting integrity culture in an organization setting the right tone from the top Sharing of Malaysia Airlines Integrity Plan Building in continuous auditing and monitoring mechanism to track and detect potential fraud risks in the organization Enhance Board oversight with respective to the implementation and effectiveness of the compliance and ethics program 2

3 Awards Winning Airlines Asia's Leading Airline World Travel Awards (WTA) 2013 Skytrax World Airline Awards 2013 The World's 5-Star Airline Award Best Airline Signature Dish 2013 Skytrax World Airline Awards 2012 The World's 5-Star Airline Award World's Best Cabin Staff 2012 Best Airline Signature Dish 2012 Gold Award for Transportation, Travel & Tourism Category Putra Brand Awards 2012 The Most Promising Brand Award (Firefly) Putra Brand Awards 2012 World's Leading Airline to Asia World Travel Awards (WTA) 2011

4 What is Integrity? INTEGRITY is demonstrated by people who do the right thing, no matter what the circumstances may be. I Will: Do the right thing, even if it isn t going to be easy for me or for others. Make sure there is no difference between what I say and what I do. I will be consistent and true to my heart.

5 Unethical behaviors are: Non-disclosure of a personal interest in a transaction Manipulation of data such as: -Cash received, ticket data, staff, payroll, vendor and customer records Bribery and corruption Inaccurate expense claims Abuse of company time and resources Unauthorised computer access to restricted areas of the network Falsifying results of financial transactions 10

6 Driving Factors of Fraud Weak internal control Poor management oversight Single supplier/vendor Decentralised autonomous units Middleman, large transactions Cressey Donald 1950 Vacation issues High lifestyle Greed I do this for my family Job dissatisfaction Company owe me I just borrow BIG EGO! A perspective that rules are made to be bent I deserve this. My success is my evidence Believe fraud wont be prosecuted Excess profits available Fraud is Always Committed by Trusted Souls 10

7 Additional Element - Capability They also suggested four observation traits for committing fraud: Authoritative position or function within the organization. Capacity to understand and exploit accounting systems and internal control Confidence that he/she will not be detected, or if caught, he/she will get out of it easily. Capability to deal with the stress created within and otherwise good person when he or she commits bad act. Wolf and Hermanson (2004)

8 Promoting integrity culture in an organization setting the right tone from the top

9 Promote Integrity Culture - Setting right tone from the top Setting right tone from the Board through Ethic Policy Statement and Anti-Fraud Policy Statement Clearly spell out and communicate acceptable and unacceptable behaviors through Code of Ethics Conduct regular education and awareness program divisional townhall session, management development program, integrity forum. Enforce Consequent Management ensure same yardstick applies across the organization regardless of staff ranking

10 Sharing of MAS Integrity Plan

11 MAS Integrity Plan Plan (MIP) Prevention Education Assurance Consequence Enhancement Identify gaps in practices, system, policies and procedures and provide practical mitigations to fraud risk Ethics Policy Statement Anti Fraud Policy Statement Staff Rotation Program Collaboration with HR on staff with Procurement functions Fraud Risk Management Collaboration with RPAS on Fraud Risks in Business Unit Integrity Program Staff Integrity Pact Suppliers/Vendors Establish and implement integrated programs to instill understanding and awareness on integrity GCEO Integrity Message Integrity Bulletin Senior Management Retreat Program Induction Program Management Development Program Leadership Development Program ican Programme Anti-Corruption & Good Governance Modules Investigation Courses Implement mechanism to assure conformance to regulation, professional standards, policies, procedures and work processes. Monitoring Adherence to Control Traffic Light Charts Continuous Monitoring Hot Spot & Weak Spot Assessment Periodic Screening Test Selected identified area for Spot Check & Surveillance based on intelligence. Enhanced by collaboration with MoU (on ad-hoc basis.) Establish and implement mechanism to impose penalty on activities that taint company s integrity. Consequence Management Review of Consequence Management Policy Strengthen the tone from the Top on Integrity. Review of Disciplinary Procedures Referral to authority on complex cases based on approved ad-hoc basis. Provide evaluation, monitoring and reporting system to ensure efficacy of integrity initiatives Whistle Blower Program Internal Control Incident Report (ICIR) Smart Partnership MoU between MAS & MACC signed on 25OCT12. Engagement & Collaboration in the area of priority i.e. Education, Awareness and Intelligence. Staff Integrity Award Recognition of staff with good conducts. Continuous Action & Monitoring 2013 Action Items 2014 Action Items

12 MAS Integrity Plan What do we want to achieve? Present At times, pushed by deadline, rushed to make decision May not get the best value out of the money we spent Generally perceived to be inefficient and having too many red tapes Opaqueness, silo mentality Take chance, find excuses for wrong doing Future Making better business decision Save money reduced cost of inefficiency Increased sense of pride for employee Create a culture of transparency, trust, honesty and high ethical values. Take responsibility and ownership of owns mistake 11

13 Building in continuous auditing and monitoring mechanism to track and detect potential fraud risks in the organization

14 Malaysia Airlines Fraud Risks Indicator Dashboard

15 Fraud Risk Indicators Fraudulent Use of Credit Card

16 Fraud Risk Indicators Significant Write Off/ Credit Note

17 Fraud Risk Indicators Baggage & Cargo Theft

18 Fraud Risk Indicators Creations of Fictitious Ticket

19 Enhancing Board oversight with respective to the implementation and effectiveness of the compliance and ethics program

20 Ways to Enhance Board oversight on the effectiveness of compliance and ethics program Internal Control Incidents Report summarises all key deficiencies in control and control breakdown incidents reported within the organization Fraud Risk Indicators Dashboard sharing of results from the fraud risk assessment, surveys and audit performed. Update Board on timely manner any new laws and regulations and exposure to MAS as a whole

21 Why integrity and work ethic is important? Protects corporate assets Comply with applicable laws and regulations Maintain strong reputation Creates a safe and enjoyable workplace 14

22 Consequence Management Credibility is maintained, day by day, when you do what you say you will do. Take action no matter what position the person holds equitable Be clear on consequence of fraud or integrity issue Timely action should taken Consistency in action taken Action taken by accountable persons Department or Division heads Do you involve law enforcement agencies?

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