Collaboration Key To Combat Corporate Financial Reporting Fraud

A new report from the Anti-Fraud Collaboration identifies where corporates should begin when looking to safeguard their data and deploy a cybersecurity strategy.

Announcing the report Thursday (March 16), the Anti-Fraud Collaboration said a focus on complex accounting areas is critical to an effective cybersecurity strategy. Addressing Challenges for Highly Subjective and Complex Accounting Areas concluded that an effective accounting policy is also critical and guides all other processes.

The collaboration is also holding workshops to promote collaboration among the business community and explore best practices for corporate data security.

“Companies are sharing leading practices and voluntarily working with regulators to help deter and detect financial reporting fraud,” said City Fornelli, executive director of the Center for Audit Quality, on behalf of the Anti-Fraud Collaboration.

Institute of Internal Auditors President and CEO Richard F. Chambers, CIA, QIAL, CGAP, CCSA, CRMA, also stressed this spirit of collaboration and cooperation.

“Successfully battling fraud in financial reporting requires strong collaboration among all the principal players,” he said.

Meanwhile, National Association of Corporate Directors President and CEO Peter Gleason said “the sharing of leading governance practices is an essential element of effective board leadership.”

With the Anti-Fraud Collaboration promoting the need for collaboration, its report noted that supervisors and managers must implement accounting policies that meet best-practice standards, while accounting processes must be developed under the umbrella of these policies. These policies must also be tested in the field and monitored to ensure companies remain compliant after they have been implemented in the enterprise.

The report also identifies recommendations for internal control over financial reporting (ICFR), noting that an ICFR regime must deploy a risk-based evaluation and businesses should not overlook internal controls over non-routine transactions.