Company directors are responsible for keeping proper accounting records which enable them to ensure that financial statements comply with the Companies Act 2006. They are also responsible for safeguarding company assets and taking reasonable steps for the prevention and detection of fraud and other irregularity.

The Financial Conduct Authority ('FCA') expects senior management in firms it regulates, to consider the full implications and breadth of fraud risk, which can affect profitability, reputation, customers and the markets in which firms operate.

Risk-assessment, analysis of fraud losses and management information on effectiveness of the control environment, can inform a risk-based approach. The level of resource required is influenced by senior-management risk-appetite and whether existing controls are considered sufficiently robust to mitigate significant fraud risk.

Source of risk

Fraud risk is encountered in a range of internal and external sources, examples include:

  1. Customers, suppliers or agents using fraud to obtain money or assets from, or to conceal financial loss to, a firm
  2. Insider fraud involving employees who steal cash or other assets belonging to the firm, or who defraud customers by improper use (or diversion) of their funds or assets; often involving systems override or using knowledge of an internal control weakness
  3. Collusive fraud, where an employee conspires with a third party to cause financial loss to the firm, its customers or business counterparties

Fraud response

A fraud response framework includes:

How we can help you

FCRM assists clients to identify and assess fraud risk in internal business process and the operating environment. We also investigate loss events and trace assets misappropriated through fraud or other impropriety. We provide independence, objectivity and experience when responding to fraud issues.

We are accustomed to assisting clients with managing and responding to questions/concerns posed by a regulator, relating to fraud, error or other irregularity in the control environment (e.g. per FCA Handbook - SUP 15.3.17).

Integrity in Business Practice