In a new article, the International Federation of Accountants (IFAC) highlights huge financial implications for many organisations, as well as how Covid-19 is exposing them to a variety of other emerging risks related to virtual operations, cybersecurity, and changes in relationships with customers and suppliers that put pressure on operations and service delivery.

According to IFAC, many organisations have had to quickly change working practices and protocols to enable remote working, which presents an increased risk of fraud if internal controls can be bypassed as a result. Incentives to commit fraud may also be heightened with organisations and individuals facing unprecedented economic challenges.

In desperate times, individuals under significant work-related or personal pressures can exhibit and rationalise uncharacteristic behaviours such as enhanced risk-taking and unethical decision-making. They may also deliberately present a rosier picture of current reality through financial statement and disclosure manipulation.

In the coming weeks, months and years, it will also be critical for other professional accountants working across roles, including in finance functions, internal audit and external audit to be more alert than ever to the risk of fraud and manipulation of accounting and reporting. Information cannot be taken at face value without an appropriate level of challenge.

Key considerations in relation to reporting and fraud risk for professional accountants:

  1. Tone at the top needs to be clear
  2. Maintaining an effective control environment
  3. Re-assessment of Fraud and Reporting Risk Focused on Material Areas

The full article can be seen here: Reporting and Fraud Risk Arising from COVID-19 Pose Significant Challenges for Professional Accountants

Key References Available on the IFAC COvid-19 webpage

In a new article, the International Federation of Accountants (IFAC) highlights huge financial implications for many organisations, as well as how Covid-19 is exposing them to a variety of other emerging risks related to virtual operations, cybersecurity, and changes in relationships with customers and suppliers that put pressure on operations and service delivery.

According to IFAC, many organisations have had to quickly change working practices and protocols to enable remote working, which presents an increased risk of fraud if internal controls can be bypassed as a result. Incentives to commit fraud may also be heightened with organisations and individuals facing unprecedented economic challenges.

In desperate times, individuals under significant work-related or personal pressures can exhibit and rationalise uncharacteristic behaviours such as enhanced risk-taking and unethical decision-making. They may also deliberately present a rosier picture of current reality through financial statement and disclosure manipulation.

In the coming weeks, months and years, it will also be critical for other professional accountants working across roles, including in finance functions, internal audit and external audit to be more alert than ever to the risk of fraud and manipulation of accounting and reporting. Information cannot be taken at face value without an appropriate level of challenge.

Key considerations in relation to reporting and fraud risk for professional accountants:

  1. Tone at the top needs to be clear
  2. Maintaining an effective control environment
  3. Re-assessment of Fraud and Reporting Risk Focused on Material Areas

The full article can be seen here: Reporting and Fraud Risk Arising from COVID-19 Pose Significant Challenges for Professional Accountants