BarnOwl Info Sharing session: 26 April 2018
Managing Procurement Fraud Risk through Continuous Monitoring
Presented by Anton Bouwer, CEO, BST Data Technologies
Thank you very much Anton for your enlightening presentation at our BarnOwl info sharing event held at the BarnOwl offices in Bryanston on the 26th April 2018.
Anton, demonstrated how continuous auditing was used to ‘catch a thief’ as well as provide evidence which would otherwise be impossible to find. Mountains of data reside in all systems and when monitored continuously and visualised intelligently often paint a very different picture to what something looks like at face-value. Whilst Anton used ‘procurement’ as a case study, it is easy to see how continuous auditing techniques can be used to identify problems / inefficiencies / fraud across all processes within an organisation.
According to an article published by Deloitte in 2014: ‘The reality, unfortunately, is that no organisation is immune to fraud and corruption, particularly in its procurement cycles. The reputational and financial consequence is often disastrous.
Almost every survey conducted and statistical trend reported indicates that not only is the frequency of procurement fraud and corruption on the increase, but the quantum of losses is becoming significant enough to affect the sustainability of organisations.’
Step 1: Recognising the need
Recognising the need to investigate an area of business could be based on various factors such as suspicion / rumours / tip offs, financial losses, margins, budget versus actual etc. Anton also mentioned that it is important to be aware that fraudsters often create a diversion somewhere else in the business to divert attention away from where the fraud is actually being committed.
Typical red flags in procurement may be:
Step 2: Risk Identification:
Anton demonstrated a risk-based approach to continuous auditing whereby risks associated with each of the procurement processes were identified. For example:
Step 3: What data to monitor
When you realise that data is made up of a few simple building blocks namely: Key / Unique identifiers, Text fields, Numeric fields and Date fields, linking risk to data and deciding what to monitor becomes a whole lot easier.
Step 4: Risk rating
Continuously monitoring the data and applying business rules to the data enables you to identify high-risk areas.
Step 5: Visualise the data and observe the trends
Visualisation of data often paints a very different picture and enables one to spot trends and identify the root of the problem.
Anton shared with us some of his key learnings from the numerous continuous monitoring engagements he has performed:
In summary, continuous auditing brings risk management to life enabling key areas/controls to be monitored real-time providing an effective early warning system. Once again thank you Anton for your time and for sharing your fraud risk presentation and your extensive experience. You can download Anton’s presentation here and view a video recording of the info sharing session here.
Written by: Jonathan Crisp
Director – BarnOwl GRC and Audit software
About Anton Bouwer:
Anton has been working as an auditor since 1990. His work experience ranges from external auditor, external IT auditor, Internal IT Auditor and audit data analyst. Anton is a leading data analytics expert in South Africa and speaks on Continuous Auditing topics across Africa. Anton also worked in Europe with Deloitte and ACL for 4 years. During this period he met Grant Brodie and Prof. Hart Will, the Iegendary auditors that brought data analytics to the audit community.
Anton founded BST Technology (Pty) Ltd which is a South African company that specialises in the provision of advisory services in the continuous auditing and continuous monitoring space. BST Technology was appointed official Arbutus distributor in Southern Africa and has since been providing continuous auditing solutions to clients in the mining, finance, retail, tax and auditing sectors.
Arbutus Audit Analytics provides auditors, business analysts, and fraud investigators with the very best in data analysis technology. Based on 25 years of software innovation excellence, Arbutus will help you simplify even the most complex data access and processing challenges.
BarnOwl is a fully integrated governance, risk management, compliance and audit software solution used by over 200 organisations in Africa, Australasia, Europe and the UK. BarnOwl is a locally developed software solution and is the preferred risk management solution for the South African public sector supporting the National Treasury risk framework.
BarnOwl works closely with BST Technology providing a risk and audit management software solution integrated with the Arbutus data analytics solution.