Fraud And The Role Of Accountants To Address It

Steal illegal webAs idealists we wish to live in a utopian corporate world that is free from vices like accounting frauds and ‘white collar’ crimes. However, ever so often, we come across cases of fraud in the corporate world, across all geographies. On its surface, it might appear that entities from developed countries are faring better than emerging economies and the under-developed world in matters of preventing corporate accounting fraud. However, the reality might be shrouded by the sophistication in how frauds are committed in the modern times; cybercrimes and computer fraud proliferate which threaten our economic well-being, our private lives, and the system that protects us from abuse and harm.

By the very nature of their occupation, accountants invariably would come across such frauds in some form or the other as they discharge the duties of their office. Faced with such glaring occurrences, what should an accountant do to address such corporate frauds? The below mentioned points may be used as a guide for accountants who wish to understand their roles and responsibilities when they encounter fraud:

Subject matter expertise: Before concluding that there is something out of place in your organization’s accounts, one must understand and analyze company financials fully. For instance, the starting point may be to tally the three financial statements, namely, profit & loss statement, cash flows and the balance sheet. Most fraud signals can be detected at this level of analysis itself, as when an item or items susceptible of misappropriation sticks out as “un-ordinary”. Check, re-check and dive deeper into payment vouchers, all the way down to the source documents to ascertain that, indeed, fraud has been committed.

Articulate your concerns to superiors: It is an accountant’s duty to immediately alert superiors as soon as probably cause for the commission of fraud is established. The articulation must be data driven, not qualitative or subjective. The more quantitative the articulation, the more it is probably that your superior or persons in authority will be able to support your case. Providing hard evidence to back up your claim makes it easier for your superiors to understand your findings.

Escalation to higher management: If the discussion with superiors does not lead to any action on ground, it’s the accountant’s duty to escalate their findings and recommendations to higher management. Perhaps the management is unaware of happenings in the lower rungs of the company. It is important to communicate to them what the nature of the fraud is. Here, the communication form should be different from how you have previously communicated it to your superiors. Communicate the detail in a concise, non-technical manner complete with documentary proof and your findings; in this way, management is quickly able to grasp the crux of the matter.

It is each company’s duty to provide a workplace that adheres to pronounced ethical practices. Despite this, when an accountant witnesses or discovers anomalous and highly irregular transactions, he should be ready to face the risks involved in analyzing and reporting frauds in the workplace. While it is true that his job may be at stake, still, one must consider whether working on the wrong side of the law is going to remain unnoticed in the long run. Overlooking a crime is, sometimes, equivalent to participating in the same. Therefore, as an accounting professional, if you happen to observe an anomaly, understand the details, gather the relevant data, and report it at the opportune time.

Talent Gap in the Organization

rear view of a businessman training business executives at a seminarBusiness today is getting more complex than ever. Globalization, advent of information and fast-moving mobile technology and newer business models are making managing business ever more difficult. While the trend has always been towards increasing complexity, the kind of speed with which things are changing in the business world is staggering, if not outright overwhelming. What the extent of the talent gap is and how these can be fixed is something we ponder about in this article.

Nature of the ‘talent gap’

The talent gap is not just a regional phenomenon; it encompasses all corners of the world, in every region and across every sector. There is a dearth of high-tech talent across the board, especially in the Western world where the need for this kind of talent is more. In other parts of the world, there is a dearth of talent in the infrastructure space. Others don’t have enough healthcare talent. Talent shortage is in fact a common denominator throughout the world.

A survey by the Manpower Group shows that of the 10,000+ employers surveyed across the world, including the Middle East, 34% find it difficult to fill jobs with the right kind of talent. Skilled trade positions seem to be the most difficult position to fill in the Middle East, in contrast to sales talent in Asia and engineering talent in the Americas.

Even staggering numbers are reflected in a study by Deloitte, which states that 71% of industry representatives feel that retaining critical talent is their most important worry. Apart from a shortage in skill sets, the talent gap manifests in high attrition rates, which can undermine business growth.

So many jobless, yet so many jobs to fill

What is even more disturbing is the fact that there is widespread unemployment as well! How can there be a dearth of talent alongside a pool of people who wish to work but are out of jobs?  In fact, the World Economic Forum has found through research that the Middle East has one of the highest percentages of unemployed youth. Well, the gap is what we can term ‘talent gap’. Those who are out of jobs do not have the right skills to fill the need of the jobs in the industry and businesses.

How can we bridge the talent gap?

It is critically important to develop strategies within your organization to bridge the talent gap. What are these strategies? Here are some pointers which might help:

  1. Training & Development program: Several organizations have a dedicated training & development program while others do not have any program at all. And for those who have, they do not have a structured and effective approach to implement training and development. Having a well thought-out training and development program can go a long way in bridging the gap. Alternatively, engaging with reputed educational and vocational training institutes helps identify talent and build a pipeline for the future. This can ensure that the talent funnel is adequately filled.
  2. Identifying the gap through periodic assessment of work performance: Identifying the gap between your employee’s performance and the desired level of performance can help resolve the gap faster and help bridge the talent gap in the long run. Until the organization understands what the gaps are, how can they be filled?
  3. Setting the foundation of well-defined key skills: By clearly defining the duties a position requires, identifying the skill sets, and the list of abilities of each task, matching your employees or candidates to job-specific competencies for the role becomes easier to manage.

Besides this, the business community should influence policy makers to make education more relevant and in sync with industry needs. Sponsoring a few programs and advising institutions on what the curriculum should be is advisable to address the talent shortage.