Shakespeare Relevance Today

?English Discussion on Shakespeare „What point is there in studying a dramatist who lived 400 years ago? † Shakespeare is a British dramatist, lyric poet and actor who lived from 1564-1616. Today it’s the 6th of september 2010. Shakespeare died almost 400 years ago. So why should people still keep busy with someone who lived such a long time ago? Why is Shakespeare still studied today? Many pupils would answer: Because teachers love to bore us. How could someone who lived 400 years ago write about anything which is from current interest?I think, even if Shakespeare doesn’t live anymore, he has a certain influence on the present. Weather in his own works (Romeo and Juliet, Midsummer Night’s dream, Hamlet, Macbeth) film adaptions of his works, theatre plays or in our everyday life- Shakespeare is everywhere. Besides Shakespeare is not just any dramatist. He is the dramatist who shaped the English language and whose words are still used today. There are about 1700 words which Shakespeare used first in his works. Most of these words, for example â€Å"critical† or â€Å"bloody† are still used even in our everyday conversations.But it’s not only his words that are still used, there are even whole expressions just like â€Å"There is something in the wind† or â€Å"That’s Greek to me†. By the way Shakespeare is also the most quoted dramatist. Who doesn’t know the quotes â€Å"To be or not to be† (Hamlet) or â€Å"A horse, a horse, a kingdom for a horse†? (Richard III) He is the dramatist whose language and expressions still fascinate people. Especially nowadays, in the century of language decline, Shakespeare’s well-formulated rhymes, seasoned with word games and his words, full of meaning and truth can inspire people.His sonnets are of such a beauty, that it’s a joy to read them. It seems like he didn’t only use the words- he brought them to life, jus t like his characters. When reading the book you can feel with them. His characters are failable, they do things because of reasons and motifs, which are still relevant today, just like love (Romeo and Juliet) or jealousy (Othello) He is the dramatist who wrote about topics which are universal and the dramatist who wrote about both the beauty of life and the ugliness of it.Certain situations which are given in his works could still happen today. Shakespeare’s probably most famous work â€Å"Romeo and Juliet† is for example about forbidden love because of hatred between two families. Today there are still reasons just like religion or nationalities why lovers can’t be together. In â€Å"A Midsummer night’s dream† Shakespeare describes the funny side of life that results from misunderstandings.I guess for every one of us there has already been a situation where it seemed like there are really elves who messed everything and left a love chaos. â€Å" The tragedy of Othello† shows us, what people do out of jealousy, and how easy it is to influence people. Shakespeare is the dramatist who understood the human mind very well. He was a connoisseur of human nature. Reading Shakespeare’s works and identifying with his characters can help us to develop a better understanding of human nature and a wider knowledge of the factors which influence human behaviour.Shakespeare was a genius and I think it’s important to motivate pupils to deal with him. There are not many pupils who would do that voluntarily but I think if you fade out the prejudice that the language is too difficult to understand or that teachers just want to bore us with Shakespeare it can be a pleasure to deal with his works. Just as Ben Jonson (british poet, 1572-1637) once said â€Å"He was not of an age, but for all time! † And I guess that’s right.

A Golden Age: 1960s

The 1960s era, commonly referred to as the â€Å"Golden Age†, represents a fascinating turning point for economic and post war policies world over. It was a decade stretch that lasted soon after the Second World War to initial oil crisis that began in 1973.Recognized economists, politicians and senior government officials have deliberated upon the socio-economic policies and their consequences during that period.There has been much speculation concerning whether there were errors in the 1960s economic policies that could have contributed to the great inflation of the 1970s. Key players’ roles in that era’s major economic decisions are scrutinized to establish their positive and negative contributions to the great economic boom and the negatively perceived inflation.Some of these figures included Lord O’Brien who was the Bank of England’s Governor between 1966 and 1973. The considerations were both from an official or a political position held by the individuals.However, even with the inflation, the 1960s decade seem to be an economic golden age as viewed from the 1990s perspective due to the major economic reformations and inventions that took place during the period. It is in this respect regarded as an economic apogee whose high/crest preceded the tribulations decent that followed. National income’s growth rate was faster than ever in history (Jason, 2001, p.45).The unemployment level in Britain for example remained below 2.5% of the total labour. In many instances, it remained below 2%, far much below the proceeding two decades. For most of this golden decade, the inflation averaged below 4% even though it was a reason for major concern especially as it rose to between 5-6% in and within the last 2 years of the decade.The 1967 balance of payments devaluation particularly led to surplus that was very healthy after it was affected to abide to post war years problems.Generally, 1960s is regarded as a social and economic policy experimental period where major innovations took place and resulted to admirably noteworthy economic revolutions. In Britain for example the endless departures successions in the countries fiscal policies including gains in capital tax, regulatory tax, selective employment and corporation tax were major economic factors on the one side of the ledger whereas grants on investments and regional employment premiums comprised the other (Diller, 1995, p.23).The National Plan and the National Economic Development Council were the major economic organs of the government that attempted to accelerate the economic growth rate especially through the use of long successive experimentation of income policies to control inflation.Industrial restructuring was done through the industrial reconstruction corporation as a concerted effort to have an overhaul of the industrial. The 25% premium surrender on investment currency on temporary surcharged imports played a vital role in the balance of payments operations as efforts were made to join the European Community.Other methods included opening of new universities as well as relaxation of procedures of Open University Learning system. This was facilitated by relaxations in the â€Å"permissiveness† law.However, the golden age survivors usually do not see back to it with any particular individual resounding success. Most of them don’t have the feeling that they had singularly been carried or blessed for the successes but are sometimes retrospective on the fact that this period was also characterized by crises especially the balance of payments crisis.Notably, the long uncertainties of currency, the 1968 catastrophic prediction of the following years and the long deferred 1967 devaluation to reduce difficulties in the balance of payments were some of these crises. And several years later, a number of the 1960s experiments were abandoned (Caircross, 1992, p.13).Furthermore, the 1990s reappearances of difficulti es in the balance of payments may perhaps revive the experiments and crises of the 1960s.Considering for example the narrowly fixed exchange rate limits within the European monetary system, and the external deficit that is enormously increasing, the temptation to revert to the golden age policies and innovations is quite strong. Britain’s dilemma comes from an inclination of great magnitude of restoring her competitive power.Other countries of the world have also experienced these difficulties as well although different world industrial economies experience substantiated differential effects.This is especially considering the fact that continental countries had a faster growth rate as compared to the UK but in the 1950s they grew less fast than the UK did. All countries therefore had their unique problems.Paris experienced riots and a strike that almost brought the government down early in 1968, between 1969-70 Germany suffered a great inflation than at any other time after t he war whereas French franc devalued within one year after the sterling pound and again towards the end of the golden decade (Stuart, 1999, p.32).

Customer LIfestyle and Behaviour

According to ‘DC, it is important for local companies in Malaysia to have a good understanding of the marketplace for their products and their target customers before engaging themselves in online retailing to ensure that they are able to develop more effective ND meet the requirements and expectations of their online shopping customers (Deadline Chug AFAIK Hard, All. Kuwaiti, and Husbanding bin Small, 2006) Demographic influences online consumer behavior Demographic based on variables like age, gender, income and occupation which can influence consumer behavior dramatically.Age Graph 1: Statistic for Malaysian Online Shopping- Age Sources: http://humanities. Com. My/blob/online-shopping-statistics-in- Malaysia. HTML Graph 1 above shows the Malaysian online shopping which affected by age. Statistic shows the highest rank is 26 years old to 30 years old because most of hem are single and non-married nations and they have the ability to purchase in online shopping. However, the l owest rank of the age is 21 years old and below because majorities are students and they do not have financial to purchase products and services instead of their financial is control by their parents.Gender Figure 1: Percentages of gender in online shopping Sources: http://UCLA. Com/business-hemline-shopping-scenes tm_source=afterburner=feed=Feed:+Kclau+ In perception of genders, statistic shows that males (56%) are more active on online purchasing while the females (44%) are catching up. This is because most of males are sensitive in technology gadgets and they are better in purchasing convenience important products. Whereas, females purchase products emotionally and individually, which means most of the time they purchase clothes, shoes, bags, cosmetics etc.Especially females who are below 21 years old always purchase K-pop stuffs via online shopping. Income Table 1: Income in Malaysia Sources: http://www. acAcademiaedDueownload Figure above shows the average of MaMalaysianannual income. Nations who earned less than RMARMY000 will always enjoy online shopping because they can look for cheaper products. However, the frequency of online shopping will decrease if the income increasing because they have ability to purchase expensive and quality products Occupation Chart 1: Statistic for Malaysian Online Shopping maMalaysiahtHTMLigure above shows the statistic of online shopping.The statistic shows that top management executive always used to online shopping as they need to up-to-date for the new products, technologies and systems so that they can earn the profit and reduce the cost. However, most of the retired and unemployed nations are laggards and they are not familiar to online shopping. Online buying behavior There are Top 6 Online shopping sites in Malaysia. However, each online shopping site has their own characteristics and specialty. LeLongmyMynd eBay Malaysia are the most popular local auction in Malaysia that you can search for the cheapest price of g adgets, DSDSSSLameras, computers and fashions.Customers also can look for discount and great offer in this website. ZaAzaleamyMynd LuLovelaceashion are the most well-known boutique websites that every customer loves to browse especially females because they can buy a lot of clothes, bags and shoes without shipping cost and every purchased items will send to house. SuSuperblyalaysia is backed by MaMaybugor shop luxury and quality products online at affordable cost. Whereas BeBustyorld is the online shop for cosmetics, fragrances, skin care, make up and health care.Table 2: Summary of Top 6 online websites (self-made) Frequency of Shopping Online Table 3: Frequency of Shopping Online Sources: http://ssSSLaiApplobal. coComN/asAsiaxpress/archives/1090 Chart 2: Frequency of Shopping Online Sources: Self-made According to table 3 and chart 2, the highest percentage of frequency of shopping online is about once a month (24%) and the lowest percentage of frequency of hopping online is almos t every day (1 This is because MaMalaysianre busy in their work and family and there are some people who are still believe that the security still dangerous.Respondents purchase online Table 4. ; What respondents purchase online ; http://ssSSLaiApplobal. coComN/asAsiaxpress/archives/1090 Sources. Chart 3. Based on the table 4 and chart 3, clothes and fashion accessories are the highest percentage which MaMalaysianill purchase online because there are many types of cheap clothes and they can shop around before purchase. ZaAzaleamyMys the example f clothes and fashion accessories website. Figure 2: ZaAzaleamyMyources: http://www. zaAzaleacoComy/YHowever, the lowest percentage of purchase online is white (major) appliances such as refrigerator because consumers prefer to see the quality of the appliances more than the price. If the quality of appliances is higher and the usage is long, consumers will afford to purchase if the price is not so expensive. Reasons of purchasing online Base d on the pilot test, 73% of MaMalaysianre prefer to purchase clothes and fashion accessories because it is hard to find suitable clothes in a day and it is wasting of immimef they purchase via offline shopping.They can do some research like price, shipping cost, services and varieties of products from different website. Besides, 40% of MaMalaysianoves to purchase books from online because there are some books are not selling in Malaysia such as â€Å"DuDeducefrom China. These books are recommended by every Chinese teacher but due to the low demand, these are not supply in Malaysia. So, MaMalaysianho are interested in these books only can purchase via online. Moreover, they will save their money as they will only direct and focus on what they should purchase.Unlike offline shopping, MaMalaysianill buy additional items instead of purchase their needs and wants such as physical stores that use the product placement and sales to attract them to purchase items. In addition, there are 25 % of the nations will purchase toys from online like minions, piupchucknd etc. Furthermore, 24% of MaMalaysianrefer to purchase medical supplies and cosmetics through online because some of the medical supplies and cosmetics difficult to purchase in Malaysia as they have not be approved by Malaysia's government. Environmental factor drives/discourages of online shoppingEnvironmental factor include political (also includes legal) and social which will influence the online shopping. In Malaysia, there are some cyber laws to protect nations for example Digital Signature Act 1997, Computer Crime Act 1997, The Copyright Act 1997, The Communication and Multimedia Act 1998 and The Electronic Government Activities Act 2007 (NiKnitmoMostgoGobmyMy2010). Those are positive influence to nations who are decided to have online purchasing. However, social cases have affected consumer bebehaviorhat there are negative incidents were happened for online purchasing.For example, nations fear of online purchasing because it is not security via online transaction, which means there will be spsparen your computer like personal data and account number will be detected and stolen. Negative impact from the environmental factor will be hard to boost up Malaysia's economic. Moreover, It is hard to identify the quality of the product like most of teenagers nowadays prefer to buy K-Pops' albums, posters and so on through online and they feel angry and disappointed that the products that they purchased are not in good quality.Psychological factor drives/discourages of online shopping MaMoscowierarchy can be used to represent the psychological factors which developed by Abraham MaMoscown year 1943. MaMoscowierarchy shows the drives and discourages of online shopping. Figure 3: MaMoscowierarchy Sources: http://www. psPsychologicallycoComlblobide-and-seek/201205/our-hierarchy- needs MaMascotsierarchy is used because MaMalaysianeed to have a comfortable and easy lifestyle. After they know the n eeds and wants via online purchasing, they will ask for safety which is security in morality, family, health and resources.However, if they got the negative feedback from friends and family, they will not onuntiedo purchase products and services via online. Meaning, nations must go through first step which is physiological before they enter to other layers. China Demographic Age Figure 1: percentage of age purchase online Source: http://www. fzFizzlingcoComnfo/view/2011 _6/1 51020438. htHTMLrom the graph we can see that 18-30 years old people is the most percentage to choose online shopping, the age below 18 percentage is almost similar with age between 31 and 35. Ages at 36 above are less to choose online shopping.We also can see that age between 18 and 24 the percentage growth very fast. Basic this, we can now that in China, young people are more prefer online shopping than old people. Figure 2: percentage of income purchase online Source: http://www. emNearsightedlycoComouurinals htHTMLarArticled723343&sh0†². FhFifthhe online purchase group in China is more in low-income family. It is get 62. 9%. (Lower than CNCCNY000 per month); the middle incomes get 35. 5%. (Higher than CNCCNY000 but lower than CNCCNY0000 per month); and the high income family percentage lust 1. 6%).Gender Figure 3: Gender percentage of China online purchase. Source: http://www. liLionfishcoComcnCNNeb/oversea_show. asAspsArArticled34279 From this graph, we can see that online purchase in China, male is more than female. It is have different with our traditional concept. The male to female ratio was 5. 4: 4. 6, slightly more male consumers. Occupation Figure 4: Occupation percentage of online shopping Source: http://www. liLionfishcoComcnCNNeb/oversea_show. asAspsArArticled34279 For occupation, student this group is get percentage 20. 4%. Technical, worker and basic social worker almost get 39. %. However, the high level managers Just get 2. 2%. From there we can see that the distribu tion of Job, age, income is the same. Education Figure 5: Education of online shopping From this graph, we can see that the education has negative relationship with the percentage of online shopping. The more education level higher, they will lesser online shopping. Online buying behavior There are a lot of online shoppers in China. But mainly market is share by around 9 brand of online shopping company. The first place for China online market is TmTamaleIt can get around 50. 8% market shares.And the second place is JiJinglingIt can get around 17. 1% market shares. The third place is TeTangentIt can get around 5. 6% market shares. The details are as below: Figure 6: market shares of China online sales Source: http://www. chCinematographiccoCom836/china-online-shopping-market- snapshot-for-q2sq013/ Frequency of item purchase online Figure 6: Frequency of purchase online in China Source: http://www. reArchdiocesancoComtHTMLeport/2010/5970. htHTMLn China, most people online shopping ar e about twice to four times per month. And only 3. 8% people no shopping online experience.As this research, we can find that online shopping is very general in China Attitude Nowadays, online shopping becomes more and more popular in China. In these 10 years, more Chinese choose purchase online. Especially the young generation, they refer purchase online than shopping at store. During the survey, there are 47. 4% people prefer online shopping, 40% have no attitude and 12. 6% people dislike online shopping. (ReRestheHerscoCom2013) Some of people who have online shopping experience worried about the quality of the product and the post purchase service.During the survey, around 55% people worried about the quality, and 27. 1% people worried about the post purchase service. (ReRestheHerscoCom2013) So the most online shopping people's attitude is choosing the famous online shopping website and good evaluate shopping store. Reasons of making purchases Price Online product is always cheap er than the one in shopping mall. It is because online shopping can save the capital for rent store, transportation, and so on. And there is no agent to deduct a percentage from a sum of money. So the price is always cheap for customers.Compare For online shopping website, there are thousands of stores for the customer, and every store has different products for customer to choose. So the consumer can easily to compare the same product from different brand or store. It is better for consumer to make evaluation. Time Online shopping can save time for the people who do not have enough time for hopping. Shopping online Just clicks the mouse, and then you can purchase what you want. It is fast and easy for you. Environmental and psychological affect online shopping Environmental In China, the environmental pollution is a big problem.The automobile exhaust is the one reason leads that. So the companies provide the website for people shopping online. It can decline the pollution and make a healthful life style. For the customer, they also prefer online shopping. The environmental pollution is bad for the health. People inhale hazardous substance can lead many types of disease. The bad weather lsalsoan lead less shopping for sell in store. But online shopping will not have this kind problem. Whatever raining, snowing, or clouding outside, it will no effect of online shopping. For the company, it will keep the sale stabilized.For the online shopper, they can purchase their favorites product any time. So the environment can affect online shopping. Psychological Online shopping no needing use the real money, they usually use the credit card to pay. The customers do not have the behavior pay the real money, it will lead they have less conscious of money, thus no control for purchase. For the online shopping ommanyit is an advantage thing. But for customers, they usual regret after purchase. In another hand, online shopping have model to show the product to the consumers. The visual stimulation also is a point that leads more purchase behavior. People believe that the same effect of product will come to their own. Actually, different people suit for different things. Model has standard stature, and beautiful face. But not all the consumer has that. So we can see that the psychological also a point to affect online shopping. Japan Demographic influences online consumer behavior of Japanese in terms of age, ncincomegender and occupation (KoKettlend Keller, 2012). Age In terms of age, Japanese are mostly made up of generation of middle-age group of people.From the statistic shown below, Japan might not encounter the same issue of aging like Singapore as the number of young-born generation is increasing and there is a pro for Japan to accelerate their economic transformation. Figure: Average age of Japanese Source: Ministry of Internal Affairs and Communication Gender in Japan Figure: Average Gender in Japan From the graph above, it is vivid that the wom en dominated the Japan population, and then followed by men. There is about 25. 5 million of married couple which forms their family. Only a small part of people are in widow state.Disposable Income Figure: Disposable income of Japanese families It is analyzed that a family with a working head-of-household had a gross income of Yen 562,094. It is notable that the steep increase in disposable income in December. This is due to the year-end bonuses that Japanese workers received. Occupation and Lifestyle There are six type of popular occupation in Japan which is teacher, fisherman, models, physical therapist, engineer and chef. Japanese people enjoy a high standard f living, and nearly 90% of the population consider themselves part of the middle class.However, many studies on happiness and satisfaction with life tend to find that Japanese people average relatively low levels of life satisfaction and happiness. Japan Consumer Online Shopping Behavior Figure 1. 0: Frequency of online sh opping in Japan Source: http://ssSSLaiApplobal. coComN/asAsiaxpress/archives/1090 From the analysis of the chart above, it can be identified that the online shopping behavior of Japanese is very active. 36% of the respondents will shop online for almost every week. The highest number of Japanese, about 18% will shop online for about once every two weeks.In general, Japanese online shopping is categorized as purchased online regularly as more of the people will be online shopping within a month. Figure 2. 0: Frequency of items purchased online in Japan From the above chart, it can be analyzed that most of the Japanese like to purchase the clothes and fashion accessories by online shopping. This is due to the modern thinking and Y-generation style. The second preferred items that Japanese purchase online are food and drinks. This includes the fast food restaurants as the people owdoodadsre very busy of their hectic life and work. After that, it is followed by books category.This inclu des the magazines, newspapers, e-books and so on. This is quite common among Japanese because they like reading pretty much. Meanwhile, stationeries and major appliances shared the same dividend of 5% respectively. Toys score the least for 4% because the parents are more likely to bring their children to buy the toys in shopping complex rather than online shopping. Reasons for Japanese to make such Purchases Generally, Japanese perceive online shopping to be convenience (71 %) and easy 29%), with 62% of the respondents claiming that online shopping is easier than shopping via offline catalogue and telephone (Freeze, 2000).In the pilot test survey, a questionnaire is distributed and the respondents are allowed to make more than one reasons of purchasing online. For Japanese, according to website of online shopping behavior in Asia(2013), 78% of the respondents indicated that secure payment facility and convenient payment methods are the driving force. This is because they are confide nt towards the money transfer between bank and mobile phone which needs deidentificationhen they purchase online.From the website of online shopping behavior in Asia(2013) too, 86% of the respondents viewed that price and value is the most important factors because many times for conventional shopping they tend to spend a lot more than the required expenses like eating out and trtravelingFrom the analysis too, it can be identified that Japanese are really not concerned about the reputation of the website and customer service of the website. For 82% of them provide opinions that low delivery charges will be their major concern since some of he websites provide free shipping of they purchase till certain amount of money (Freeze, 2000).Furthermore, Japanese are quite neutral towards the speedy transaction of the website. Plus, 70% of them are more focus towards promotional offers because they can find great deals everywhere, that made up for shipping and handling fees (Freeze, 2000). E nvironmental Factors Drives/Discourage Online Shopping Japan has always been perceived as one of the world's healthiest societies. Japanese consumers are increasingly conscious of their health. Despite the issue of pollution ndNDegree of polluted of environmental factor, Hawkins and MoMotherboards010) mentioned that Japanese more likely to purchase online.Besides that, they would not have the problem of finding a parking place. This means that environmental consciousness has been emerging and results in active online shopping in Japan. A survey conducted last year by the global advertising agency J. Walter Thompson found that 51 percent of Japanese consumers are more focused on the environment(ScCoffmannd KaSankt al, 2010). The survey found that the Japanese will buy environmental friendly products in the next five years extensively.

Fraud Risk Management

Fraud risk management A guide to good practice 1 This guide is based on the fi rst edition of Fraud Risk Management: A Guide to Good Practice. The fi rst edition was prepared by a Fraud and Risk Management Working Group, which was established to look at ways of helping management accountants to be more effective in countering fraud and managing risk in their organisations. This second edition of Fraud Risk Management: A Guide to Good Practice has been updated by Helenne Doody, a specialist within CIMA Innovation and Development.Helenne specialises in Fraud Risk Management, having worked in related fi elds for the past nine years, both in the UK and other countries. Helenne also has a graduate certifi cate in Fraud Investigation through La Trobe University in Australia and a graduate certifi cate in Fraud Management through the University of Teeside in the UK. For their contributions in updating the guide to produce this second edition, CIMA would like to thank: Martin Birch FCMA, MBA Director – Finance and Information Management, Christian Aid.Roy Katzenberg Chief Financial Offi cer, RITC Syndicate Management Limited. Judy Finn Senior Lecturer, Southampton Solent University. Dr Stephen Hill E-crime and Fraud Manager, Chantrey Vellacott DFK. Richard Sharp BSc, FCMA, MBA Assistant Finance Director (Governance), Kingston Hospital NHS Trust. Allan McDonagh Managing Director, Hibis Europe Ltd. Martin Robinson and Mia Campbell on behalf of the Fraud Advisory Panel. CIMA would like also to thank those who contributed to the fi rst edition of the guide. About CIMACIMA, the Chartered Institute of Management Accountants, is the only international accountancy body with a key focus on business. It is a world leading professional institute that offers an internationally recognised qualifi cation in management accounting, with a full focus on business, in both the private and public sectors. With 164,000 members and students in 161 countries, CIMA is committed to upho lding the highest ethical and professional standards of its members and students.  © CIMA 2008. All rights reserved.This booklet does not necessarily represent the views of the Council of the Institute and no responsibility for loss associated to any person acting or refraining from acting as a result of any material in this publication can be accepted by the authors or publishers. Acknowledgements Fraud risk management: a guide to good practice 2 Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Fraud – its extent, patterns and causes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. 1 What is fraud? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. 2 The scale of the problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1. 3 Which businesses are affected? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1. 4 Why do people commit fraud? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1. 5 Who commits fraud? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1. 6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Risk management – an overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2. 1 Wh at is risk management? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2. 2 Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2. 3 The risk management cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2. 4 Establish a risk management group and set goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2. 5 Identify risk areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2. 6 Understand and assess the scale of risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2. 7 Develop a risk response strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2. 8 Implement the strategy and allocate responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2. 9 Implement and monitor suggested controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2. 10 Review and refi ne and do it again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2. 11 Information for decision making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2. 12 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Fraud prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3. 1 A strategy to combat fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3. 2 Developing a sound ethical culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3. 3 Sound internal control systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3. 4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Fraud detection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4. 1 Detection methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 4. 2 Indicators and warnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4. 3 Tools and techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4. 4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Responding to fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 5. 1 Purpose of the fraud response plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 5. 2 Corpor ate policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 5. 3 Defi nition of fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 5. 4 Roles and responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 5. 5 The response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 5. 6 The investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 5. 7 Organisation’s objectives with respect to dealing with fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 5. 8 Follow-up action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 5. 9 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 1 2 3 4 5 3 Appendices Appendix 1 Fraud and the law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Appendix 2 Examples of common types of internal fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Appendix 3 Example of a risk analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Appendix 4 A sample fraud policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Appendix 5 Sample whistleblowing policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Appendix 6 Examples of fraud indicators, risks and controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Appendix 7 A 16 step fraud prevention plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Appendix 8 Outline fraud response plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Appendix 9 Example of a fraud response plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Appendix 10 References and further reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Appendix 11 Listed abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Figures Figure 1 Types of internal fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 2 The fraud triangle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 3 The CIMA risk management cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 4 Anti-fraud strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 5 Ethics advice/services provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Figure 6 Meth ods of fraud detection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Case Studies Case study 1 Fraud doesn’t involve just money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Case study 2 Size really doesn’t matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Case study 3 A breach of trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Case study 4 Management risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Case study 5 A fi ne warning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Case study 6 Vet or regret? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Case study 7 Tipped off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Case study 8 Risk or returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Case study 9 Reporting fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Case study 10 TNT roots our fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 4 5 Periodically, the latest major fraud hits the headlines as other organisations sit back and watch, telling themselves that ‘it couldn’t happen here. ’ But the reality is that fraud can happen anywhere. While only relatively few major frauds are picked up by the media, huge sums are lost by all kinds of businesses as result of the high number of smaller frauds that are committed. Surveys are regularly carried out in an attempt to estimate the true scale and cost of fraud to business and society. Findings vary, and it is diffi cult to obtain a complete picture as to the full extent of the issue, but these surveys all indicate that fraud is prevalent within organisations and remains a serious and costly problem. The risks of fraud may only be increasing, as we see growing globalisation, more competitive markets, rapid developments in technology, and periods of economic diffi culty. Among other fi ndings, the various surveys highlight that: organisations may be losing as much as 7% of their annual turnover as a result of fraud †¢ corruption is esti mated to cost the global economy about $1. 5 trillion each year †¢ only a small percentage of losses from fraud are recovered by organisations †¢ a high percentage of frauds are committed by senior management and executives †¢ greed is one of the main motivators for committing fraud †¢ fraudsters often work in the fi nance function †¢ fraud losses are not restricted to a particular sector or country †¢ the prevalence of fraud is increasing in emerging markets. Introduction Despite the serious risk that fraud presents to business, any organisations still do not have formal systems and procedures in place to prevent, detect and respond to fraud. While no system is completely foolproof, there are steps which can be taken to deter fraud and make it much less attractive to commit. It is in assisting organisations in taking such steps that this guide should prove valuable. The original guide to good practice was based on the work of CIMA’s Fraud and Ri sk Management Working Group that was established as part of the Institute’s response to the problem of fraud. Since the publication of the original guide, we have continued to see high rofi le accounting scandals and unacceptable levels of fraudulent behaviour. This second edition of the guide includes updates to refl ect the many changes in the legal environment and governance agenda in recent years, aimed at tackling the ongoing problem of fraud. The guide starts by defi ning fraud and giving an overview of the extent of fraud, its causes and its effects. The initial chapters of the guide also set out the legal environment with respect to fraud, corporate governance requirements and general risk management principles. The guide goes on to discuss the key components of an anti-fraud strategy nd outlines methods for preventing, detecting and responding to fraud. A number of case studies are included throughout the guide to support the text, demonstrating real life problems th at fraud presents and giving examples of actions organisations are taking to fi ght fraud. Fraud risk management: a guide to good practice Management accountants, whose professional training includes the analysis of information and systems, can have a signifi cant role to play in the development and implementation of anti-fraud measures within their organisations. This guide is intended to help management accountants in that role and will also be seful to others with an interest in tackling fraud in their organisation. The law relating to fraud varies from country to country. Where it is necessary for this guide to make reference to specifi c legal measures, this is generally to UK law, as it would be impossible to include references to the laws of all countries where this guide will be read. It is strongly advised that readers ensure they are familiar with the law relating to fraud in their own jurisdiction. Although some references may therefore not be relevant to all readers, the general principles of fraud risk management will still apply and rganisations around the world are encouraged to take a more stringent approach to preventing, detecting and responding to fraud. 6 7 Defi nition of fraud The term ‘fraud’ commonly includes activities such as theft, corruption, conspiracy, embezzlement, money laundering, bribery and extortion. The legal defi nition varies from country to country, and it is only since the introduction of the Fraud Act in 2006, that there has been a legal defi nition of fraud in England and Wales. Fraud essentially involves using deception to dishonestly make a personal gain for oneself and/or create a loss for another. Although defi nitions vary, ost are based around these general themes. Fraud and the law Before the Fraud Act came into force, related offences were scattered about in many areas of the law. The Theft Acts of 1968 and 1978 created offences of false accounting, and obtaining goods, money and services by decept ion, and the Companies Act 1985 included the offence of fraudulent trading. This remains part of the Companies Act 2006. There are also offences of fraud under income tax and value-added tax legislation, insolvency legislation, and the common law offence of conspiracy to defraud. The Fraud Act is not the only new piece of legislation.Over the last few years there have been many changes to the legal system with regard to fraud, both in the UK and internationally. This guide focuses mainly on UK requirements, but touches on international requirements that impact UK organisations. In the UK, the Companies Act and the Public Interest Disclosure Act (PIDA) have been amended and legislation such as the Serious Crimes Act 2007 and the Proceeds of Crime Act 2002 (POCA) have been introduced. Internationally the Sarbanes-Oxley Act 2002 (Sarbox) has been introduced in the United States (US), a major piece of legislation that affects not only companies in the US ut also those in the UK and othe rs based all over the globe. Further information on these pieces of legislation can be found in Appendix 1. As well as updating the legislation in the UK, there have been, and will continue to be, signifi cant developments in the national approach to combating fraud, particularly as we see implementation of actions resulting from the national Fraud Review. Appendix 1 gives further information on the Fraud Review. There are also many law enforcement agencies involved in the fi ght against fraud in the UK, including the Serious Fraud Offi ce, the Serious Organised Crime Agency SOCA), the Financial Services Authority (FSA), and Economic Crime Units within the police force. Different types of fraud Fraud can mean many things and result from many varied relationships between offenders and victims. Examples of fraud include: †¢ crimes by individuals against consumers, clients or other business people, e. g. misrepresentation of the quality of goods; pyramid trading schemes †¢ em ployee fraud against employers, e. g. payroll fraud; falsifying expense claims; thefts of cash, assets or intellectual property (IP); false accounting †¢ crimes by businesses against investors, consumers and employees, e. g. i nancial statement fraud; selling counterfeit goods as genuine ones; not paying over tax or National Insurance contributions paid by staff †¢ crimes against fi nancial institutions, e. g. using lost and stolen credit cards; cheque frauds; fraudulent insurance claims †¢ crimes by individuals or businesses against government, e. g. grant fraud; social security benefi t claim frauds; tax evasion †¢ crimes by professional criminals against major organisations, e. g. major counterfeiting rings; mortgage frauds; ‘advance fee’ frauds; corporate identity fraud; money laundering †¢ e-crime by people using computers and technology to commit crimes, e. . phishing; spamming; copyright crimes; hacking; social engineering frauds. 1. 1 Wh at is fraud? 1 Fraud: its extent, patterns and causes Figure 1 Types of internal fraud Cash Non-cash Financial Non-fi nancial Confl icts of interest Bribery and extortion Asset misappropriation Fraudulent statements Corruption Internal fraud Fraud risk management: a guide to good practice 8 The fi nal of the three fraud categories is corruption. This includes activities such as the use of bribes or acceptance of ‘kickbacks’, improper use of confi dential information, confl icts of interest and collusive tendering. These types of internal fraud are summarised n Figure 1. Surveys have shown that asset misappropriation is the most widely reported type of fraud in UK, although corruption and bribery are growing the most rapidly. Further information on common types of internal fraud, and methods by which they may be perpetrated, is included in Appendix 2. This guide focuses on fraud against businesses, typically by those internal to the organisation. According to the Associa tion of Certifi ed Fraud Examiners (ACFE), there are three main categories of fraud that affect organisations. The fi rst of these is asset misappropriations, which involves the theft or misuse f an organisation’s assets. Examples include theft of plant, inventory or cash, false invoicing, accounts receivable fraud, and payroll fraud. The second category of fraud is fraudulent statements. This is usually in the form of falsifi cation of fi nancial statements in order to obtain some form of improper benefi t. It also includes falsifying documents such as employee credentials. 9 1. 2 The scale of the problem There have been many attempts to measure the true extent of fraud, but compiling reliable statistics around fraud is not easy. As one of the key aspects of fraud is deception, it can be diffi cult to identify and urvey results often only refl ect the instances of fraud that have actually been discovered. It is estimated that the majority of frauds go undetected and, even wh en a fraud has been found, it may not be reported. One reason for this may be that a company that has been a victim of fraud does not want to risk negative publicity. Also, it is often hard to distinguish fraud from carelessness and poor record keeping. Although survey results and research may not give a complete picture, the various statistics do offer a useful indication as to the extend of the problem. There can be no doubt that fraud is prevalent within organisations nd remains a serious issue. PricewaterhouseCooper’s Global Economic Crime Survey (PwC’s survey) in 2007 found that over 43% of international businesses were victims of fraud during the previous two years. In the UK, the fi gures were higher than the global average, with 48% of companies having fallen victim to fraud. Some surveys put the fi gures much higher. For example, during 2008, Kroll commissioned the Economist Intelligence Unit (EIU) to poll nearly 900 senior executives across the world. The EIU found that 85% of companies had suffered from at least one fraud in the past three years1. This fi gure had risen from 80% in a imilar poll in 2007. KPMG’s Fraud Barometer, which has been running since 1987, has also shown a considerable increase in the number of frauds committed in the UK in recent years, including a 50% rise in fraud cases in the fi rst half of 2008. According to the UK report of PwC’s survey, the average direct loss per company over a two year period as a result of fraud has risen to ? 1. 75 million, increasing from ? 0. 8 million in the equivalent 2005 survey. These fi gures exclude undetected losses and indirect costs to the business such as management costs or damage to reputation, which can be signifi cant. Management costs lone were estimated to be on average another ? 0. 75 million. Participants of the ACFE Report to the Nation 2008 (ACFE report) estimated that organisations lose 7% of their annual revenues to fraud. It is diffi cult to put a total cost on fraud, although many studies have tried to. For example an independent report by the Association of Chief Police Offi cers (the ACPO) in 2007 revealed that fraud results in losses of ? 20 billion each year in the UK. The World Bank has estimated that the global cost of corruption and bribery is about 5% of the value of the world economy or about $1. 5 trillion per year. It is thought that these stimates are conservative, and they also exclude other types of fraud such as misappropriation of assets. While it may be impossible to calculate the total cost of fraud, it is said to be more signifi cant than the total cost of most other crimes. According to the Attorney General in the UK, fraud is an area of crime which is second only to drug traffi cking in terms of causing harm to the economy and society2. 1 Kroll Global Fraud Report, Annual Edition 2008/2009 2 Attorney General’s interim report on the government’s Fraud Review, March 2006 Fraud risk managemen t: a guide to good practice 10 Case study 1 Fraud doesn’t just involve moneyCounterfeiting is one example of fraud that can have extremely serious consequences. Technology is ever improving, making it easier for counterfeiters to produce realistic looking packaging and fool legitimate wholesalers and retailers. Counterfeiting is a potentially lucrative business for the fraudster, with possibilities of large commercial profi ts, and it is a problem affecting a wide range of industries including wines and spirits, pharmaceuticals, electrical goods, and fashion. However, there are often many victims affected by such a fraud and not just the business that has been duped or had their brand exploited.For some, the outcome of counterfeiting goes way beyond fi nancial losses and can even be fatal: †¢ In late 2006, 14 Siberian towns declared a state of emergency due to mass poisonings caused by fake vodka. Around 900 people were hospitalised with liver failure after drinking indu strial solvent that was being sold as vodka. This is not a one off problem and sales of fake alcohol have been known to kill people. †¢ Also in 2006, a counterfeit product did result in more tragic consequences. At least 100 children died after ingesting cough syrup that had been mixed with counterfeit glycerine.The counterfeit compound, actually a dangerous solvent, had been used in place of more expensive glycerine. The manufacturing process had been sourced to China and the syrup passed through trading companies in Beijing and Barcelona before reaching its fi nal destination in Panama. The certifi cate attesting to the product’s purity was falsifi ed and not one of the trading companies tested the syrup to confi rm its contents along the way. It is thought that the number of deaths is likely to be much higher than the 100 cases that have been confi rmed. Fraud is often mistakenly considered a victimless rime. However, fraud can have considerable social and psychologic al effects on individuals, businesses and society. For example, when a fraud causes the collapse of a major company, numerous individuals and businesses can be affected. In addition to the company’s own employees, employees of suppliers can be affected by the loss of large orders, and other creditors, such as banks, can be indirectly affected by huge losses on loans. Consumers have to pay a premium for goods and services, in order to compensate for the costs of fraud losses and for money spent on investigations and additional security.Taxpayers also suffer due to reduced payments of corporation tax from businesses that have suffered losses. Fraud drains resources, affects public services and, perhaps of more concern, may fund other criminal and terrorist activity. According to the Fraud Review, fraud is a major and growing threat to public safety and prosperity. Case study 1 demonstrates just how much of a threat fraud can be to public safety and that there truly are victims of fraud. 11 1. 3 Which businesses are affected? Fraud is an issue that all organisations may face regardless of size, industry or country. If the rganisation has valuable property (cash, goods, information or services), then fraud may be attempted. It is often high profi le frauds in large multi-national organisations that are reported on in the media and smaller organisations may feel they are unlikely to be a target of fraudsters. However, according to the ACFE report, small businesses (classifi ed as those with less than 100 employees) suffer fraud more frequently than large organisations and are hit by higher average losses. When small companies are hit by large fraud losses, they are less likely to be able to absorb the damage han a larger company and may even go out of business as a result. The results of PwC’s survey showed that companies reporting fraud were spread across many industries, with at least a quarter of the respondents in any one industry suffering from f raudulent incidents. Industries suffering the highest average losses were insurance and industrial manufacturing. Losses in the fi nancial services industry, a sector frequently in the press and one with which fraud is often associated, were actually below average. Even not-for-profi t organisations are not immune to fraud, with government institutions nd many charities falling victim to unscrupulous fraudsters. As one director working in the international development and aid sector has pointed out, ‘In my sector, fraud is not a possibility, it is a reality and we are always dealing with a number of suspicious incidents on a more or less permanent basis. ’ PwC’s survey also revealed that incidences of fraud were highest in companies in North America, Africa and Central and Eastern Europe (CEE), where more than half of the companies reported fraud. It was lowest in the Western European region, although the UK was uch higher than the average for this region, with l evels of fraud similar to those in CEE. The EIU poll commissioned by Kroll in 2007 found that respondents in countries such as India and China have seen a signifi cant increase in the prevalence of corporate fraud in the last three years and this trend is likely to increase in businesses operating in emerging markets3. Although fraud is prevalent across organisations of all sizes and in all sectors and locations, research shows that certain business models will involve greater levels of fraud risk than others. The control environment hould be adjusted to fi t with the degree of risk exposure. Further guidance on risk assessment and controls is given in later chapters. 3 Kroll Global Fraud Report, Annual Edition 2007/2008 Fraud risk management: a guide to good practice 12 Case study 2 Size really doesn’t matter From a family affair†¦ A member of a small family business in Australia committed a $2m fraud, costing profi ts, jobs and a great deal of trust. The business owner s became suspicious when they realised that their son in law used the company diesel card to buy petrol for his own car.On closer scrutiny, they soon uncovered a company cheque for $80,000 made payable to the son in law’s personal account. BDO’s Brisbane offi ce discovered that the cheque and the fuel were just the tip of a vast iceberg. The company’s complex accounts system allowed the son in law to disguise cheques payable to himself as creditor payments. He then became a signatory and took ever larger cheques. He claimed that the poor cash fl ow was due to losses in one particular division which the family therefore closed, creating redundancies and losing what was in truth a successful business.The costs of ineffi cient accounting systems and undue trust can be massive. Every business should protect itself with thorough controls and vigilance. Adapted from ‘FraudTrack 5 Fraud: A Global Challenge’ published by BDO Stoy Hayward †¦ to a major corporate scandal WorldCom fi led for bankruptcy protection in June 2002. It was the biggest corporate fraud in history, largely a result of treating operating expenses as capital expenditure. WorldCom (now renamed MCI) admitted in March 2004 that the total amount by which it had misled investors over the previous 10 years was almost US$75 billion (? 2 billion) and reduced its stated pre-tax profi ts for 2001 and 2002 by that amount. WorldCom stock began falling in late 1999 as businesses slashed spending on telecom services and equipment. A series of debt downgrades raised borrowing costs for the company, struggling with about US$32 billion in debt. WorldCom used accounting tricks to conceal a deteriorating fi nancial condition and to infl ate profi ts. Former WorldCom chief executive Bernie Ebbers resigned in April 2002 amid questions about US$366 million in personal loans from the company and a federal probe of its accounting practices.Ebbers was subsequently charged with conspir acy to commit securities fraud and fi ling misleading data with the Securities and Exchange Commission (SEC) and was sentenced to 25 years in prison. Scott Sullivan, former Chief Financial Offi cer, pleaded guilty to three criminal charges and was sentenced to fi ve years in prison. Ultimately, losses to WorldCom shareholders were close to US$180 billion and the fraud also resulted in the loss of 17,000 jobs. The SEC said that WorldCom had committed ‘accounting improprieties of unprecedented magnitude’ – proof, it said, of the need for reform in the regulation of corporate ccounting. Adapted from CIMA Offi cial Learning System, Management Accounting Risk and Control Strategy 13 1. 4 Why do people commit fraud? There is no single reason behind fraud and any explanation of it needs to take account of various factors. Looking from the fraudster’s perspective, it is necessary to take account of: †¢ motivation of potential offenders †¢ conditions unde r which people can rationalise their prospective crimes away †¢ opportunities to commit crime(s) †¢ perceived suitability of targets for fraud †¢ technical ability of the fraudster expected and actual risk of discovery after the fraud has been carried out †¢ expectations of consequences of discovery (including non-penal consequences such as job loss and family stigma, proceeds of crime confi scation, and traditional criminal sanctions) †¢ actual consequences of discovery. A common model that brings together a number of these aspects is the Fraud Triangle. This model is built on the premise that fraud is likely to result from a combination of three factors: motivation, opportunity and rationalisation. Motivation In simple terms, motivation is typically based on either reed or need. Stoy Hayward’s (BDO) most recent FraudTrack survey found that greed continues to be the main cause of fraud, resulting in 63% of cases in 2007 where a cause was cited. Other causes cited included problems from debts and gambling. Many people are faced with the opportunity to commit fraud, and only a minority of the greedy and needy do so. Personality and temperament, including how frightened people are about the consequences of taking risks, play a role. Some people with good objective principles can fall into bad company and develop tastes for the fast life, which empts them to fraud. Others are tempted only when faced with ruin anyway. Opportunity In terms of opportunity, fraud is more likely in companies where there is a weak internal control system, poor security over company property, little fear of exposure and likelihood of detection, or unclear policies with regard to acceptable behaviour. Research has shown that some employees are totally honest, some are totally dishonest, but that many are swayed by opportunity. Rationalisation Many people obey the law because they believe in it and/or they are afraid of being shamed or rejected by eople the y care about if they are caught. However, some people may be able to rationalise fraudulent actions as: †¢ necessary – especially when done for the business †¢ harmless – because the victim is large enough to absorb the impact †¢ justifi ed – because ‘the victim deserved it’ or ‘because I was mistreated. ’ Figure 2 The fraud triangle Motivation Opportunity The fraud triangle Rationalisation Fraud risk management: a guide to good practice 14 Case study 3 A breach of trust A good example of the fraud triangle in practice is the highly publicised case of the secretary that stole over ? . 3 million from her bosses at Goldman Sachs. Motivation There were some suggestions that Joyti De-Laurey originally started down her fraudulent path because of fi nancial diffi culties she found herself in before starting work at the investment bank. De-Laurey had previously run her own sandwich bar business, but it was closed down due to ins uffi cient fi nances. According to her defence, De-Laurey’s ‘fi rst bitter experience of fi nancial turmoil coincided with a novel introduction to a Dallas-type world where huge, unthinkable amounts of money stared her in the face, day in and day out. The motive behind the fraud was primarily greed though, with De-Laurey spending her ill gotten gains on a luxury lifestyle, including villas, cars, jewellery, designer clothes and fi rst class holidays. De-Laurey has even admitted that she did not steal because she needed to, but because she could. She explained that she fi rst started taking money simply to fi nd out if she could get away with it. She says that it then became ‘a bit addictive’ and that she ‘got a huge buzz from knowing they had no idea what I was doing. ’ Opportunity In terms of opportunity, De-Laurey’s bosses trusted her and held her in high regard.She had proved herself indispensable, on both business and personal fronts , and was given access to their cheque books in order to settle their domestic bills and personal fi nances. A little over a year after starting at Goldman Sachs, De-Laurey began forging her bosses’ signatures on personal cheques to make payments into her own accounts. Realising she had got away with it, De-Laurey continued to steal money by issuing forged cheques and making false money transfers. Before long she was forging signatures on a string of cash transfer authorities, siphoning off up to ? 2. million at a time from supposedly secure New York investments. Rationalisation De-Laurey was able to rationalise her actions by convincing herself that she had earned the money she stole. De-Laurey believed that she deserved the plundered amounts as a just reward for her dedication, discretion and loyalty, and claims that she had the consent of her bosses to take money in return for her ‘indispensable services’. The fact that they were so rich they did not even noti ce the money was missing, only served to fuel De-Laurey’s fraudulent activities. She justifi ed her actions through the belief that her bosses had cash to spare.According to De-Laurey; ‘They could afford to lose that money. ’ Caught out After four years of siphoning off vast amounts of money, De-Laurey was eventually caught when her boss at the time decided to make a six-fi gure donation to his former college. He took a look at his bank accounts to see if he could cover the donation and was surprised to fi nd the balance on the accounts so low. He investigated further and realised that large sums had been transferred to an unknown account. De-Laurey was the obvious suspect. By this time, De-Laurey had actually stolen around ? 3. 3 million from this particular boss.De-Laurey was the fi rst woman in the UK to be accused of embezzling such a large sum and, after a long and high profi le trial in 2004, she was sentenced to seven years imprisonment. Various sources in cluding The Guardian, The Times, The Independent and the BBC News 15 One of the most effective ways to tackle the problem of fraud is to adopt methods that will decrease motive or opportunity, or preferably both. Rationalisation is personal to the individual and more diffi cult to combat, although ensuring that the company has a strong ethical culture and clear values should help. These methods and principles are developed further in later hapters of this guide. 1. 5 Who commits fraud? Different types of fraudster Fraudsters usually fall into one of three categories: 1 Pre-planned fraudsters, who start out from the beginning intending to commit fraud. These can be short-term players, like many who use stolen credit cards or false social security numbers; or can be longer-term, like bankruptcy fraudsters and those who execute complex money laundering schemes. 2 Intermediate fraudsters, who start off honest but turn to fraud when times get hard or when life events, such as irritation at being passed over for promotion or the need to pay for care for a family ember, change the normal mode. 3 Slippery-slope fraudsters, who simply carry on trading even when, objectively, they are not in a position to pay their debts. This can apply to ordinary traders or to major business people. In 2007, KPMG carried out research on the Profi le of a Fraudster (KPMG survey), using details of fraud cases in Europe, India, the Middle East and South Africa. The ACFE carried out similar research on frauds committed in the US. These surveys highlight the following facts and fi gures in relation to fraudsters: †¢ perpetrators are typically college educated white male most fraudsters are aged between 36 and 55 †¢ the majority of frauds are committed by men †¢ median losses caused by men are twice as great as those caused by women †¢ a high percentage of frauds are committed by senior management (including owners and executives) †¢ losses caused by managers are ge nerally more than double those caused by employees †¢ average losses caused by owners and executives are nearly 12 times those of employees †¢ longer term employees tend to commit much larger frauds †¢ fraudsters most often work in the fi nance department, operations/sales or as the CEO. The ACFE report also found that the type of person ommitting the offence depends on the nature of the fraud being perpetrated. Employees are most likely to be involved in asset misappropriation, whereas owners and executives are responsible for the majority of fi nancial statement frauds. Of the employees, the highest percentage of schemes involved those in the accounting department. These employees are responsible for processing and recording the organisation’s fi nancial transactions and so often have the greatest access to its fi nancial assets and more opportunity to conceal the fraud. Fraud risk management: a guide to good practice 16 Case study 4 Management riskIn 2007, a major British construction fi rm suffered from extensive fraud committed by management at one of its subsidiaries. Accounting irregularities dating back to 2003 were said to include systematic misrepresentation of production volumes and sales by a number of senior fi gures at the division. Management at the subsidiary attempted to cover their behaviour by selling materials at a discounted price and the fraud went undetected for several years despite internal and external audits. The irregularities were eventually uncovered by an internal team sent to investigate a mismatch between orders and sales.Following an initial internal investigation, a team of external experts and the police were brought in to identify the full extent of malpractice. The investigation found that the organisation was defrauded of nearly ? 23 million, but the fraud was said to cost the company closer to ? 40 million due to the written down value of the business and factoring in the cost of the investigation. The managing director of the subsidiary was dismissed, another manager faced disciplinary action and fi ve others left before disciplinary proceedings could be commenced. Civil proceedings were ruled out on the basis that osses were unlikely to be recovered. Operations at the centre of the incident had to be temporarily closed and more than 160 jobs were cut at the business. In addition to individual fraudsters, there has also been an increase in fraud being committed by gangs of organised criminals. Examples include false or stolen identities being used to defraud banks, and forms of e-fraud exploiting the use of internet by commercial businesses. SOCA is responsible for responding to such threats, with the support of the victim organisations. 1. 6 Summary A major reason why people commit fraud is because they are allowed to do so.There are a wide range of threats facing businesses. The threat of fraud can come from inside or outside the organisation, but the likelihood that a frau d will be committed is greatly decreased if the potential fraudster believes that the rewards will be modest, that they will be detected or that the potential punishment will be unacceptably high. The main way of achieving this must be to establish a comprehensive system of control which aims to prevent fraud, and where fraud is not prevented, increases the likelihood of detection and increases the cost to the fraudster. Later chapters of this guide set out some of the easures which can be put in place to minimise fraud risks to the organisation. Before looking specifi cally at fraud risk, the guide considers risk management in general. Risk management is defi ned as the ‘process of understanding and managing risks that the entity is inevitably subject to in attempting to achieve its corporate objectives’ (CIMA Offi cial Terminology, 2005). For an organisation, risks are potential events that could infl uence the achievement of the organisation’s objectives. Risk management is about understanding the nature of such events and, where they represent threats, making positive plans to mitigate them. Fraud s a major risk that threatens the business, not only in terms of fi nancial health but also its image and reputation. This guide is primarily focused on managing the risk of fraud, but fi rst, this chapter looks at more general aspects of risk management and corporate governance. 17 2 Risk management – an overview Risk management is an increasingly important process in many businesses and the process fi ts in well with the precepts of good corporate governance. In recent years, the issue of corporate governance has been a major area for concern in many countries. In the UK, the fi rst corporate governance report and code of best practice s considered to be the Cadbury Report in 1992, which was produced in response to a string of corporate collapses. There have been a number of reports since, covering provisions around areas such as exec utive remuneration, non-executive directors, and audit committees. The principles of these various reports have been brought together to form the Combined Code on Corporate Governance (Combined Code). The Combined Code was fi rst introduced in 1998 and among other matters, calls for boards to establish systems of internal control and to review the effectiveness of these systems on a regular basis. UK isted companies are required to provide a statement in their annual reports confi rming that they comply with the Combined Code, and where they do not, they must provide an explanation for departures from it (the ‘comply or explain’ principle). The assessment of internal controls should be included in the report to shareholders. The Combined Code is reviewed regularly and the most recent version was published in June 2008. Following the original introduction of the Combined Code, the Turnbull Committee was set up to issue guidance to directors on how they should assess and report on their review of internal controls. TheTurnbull Committee made it clear that establishment of embedded risk management practices is key to effective internal control systems. The Turnbull guidance was fi rst published in 1999 and revised in 2005. In the revised report (sometimes referred to as Turnbull 2) there is now a requirement for directors to give explicit confi rmation that any signifi cant failings or weaknesses identifi ed from the review of effectiveness of internal controls have been, or are being, remedied. 2. 1 What is risk management? 2. 2 Corporate governance Fraud risk management: a guide to good practice 18 The Financial Reporting Council is responsible for aintaining and reviewing the Combined Code, although the Combined Code is annexed to the rules of the UK Listing Authority, which is part of the FSA. The FSA is responsible for ensuring that listed companies provide the appropriate ‘comply or explain’ statement in their annual report. While the guidance is generally applicable to listed companies, the principles are relevant to all organisations and have been widely used as a basis for codes of best practice in the public and not-for-profi t sectors. Fraud risk management practices are developing along the same lines. Many other countries have also produced reports on orporate governance, usually accompanied by codes of best practices. For example, South Africa has had the King Report (version I and now II) since 1994, Malaysia has had its Code of Corporate Governance in place since 2000 and Sri Lanka issued the Rules on Corporate Governance as part of its Listing Rules in January 2007. Corporate governance requirements in the US are now largely set out within the Sarbox legislation, further details on which are provided at Appendix 1. As previously mentioned, these requirements extend beyond the US, capturing any company that is SEC listed and its subsidiaries. Some other countries have lso introduced a statutory appr oach to corporate governance, such as that in the US, although none are currently as comprehensive. A number of international organisations have also launched guidelines and initiatives on corporate governance, including the Organisation for Economic Co-operation and Development (OECD) and the European Commission. An example of a growing area of corporate governance is IT governance, which has developed in light of rapid and continuing advances in information technology. The following box gives more information on IT governance. IT Governance IT governance is about ensuring that the rganisation’s IT systems support and enable achievement of the organisation’s strategies and objectives. It encompasses leadership, organisational structures, businesses processes, standards and compliance. There are fi ve specifi c drivers for organisations to adopt IT governance strategies: †¢ regulatory requirements e. g. IT governance is covered by the Combined Code and Turnbull gu idance in the UK †¢ increasing intellectual capital value that the organisation has at risk †¢ alignment of technology with strategic organisational goals †¢ complexity of threats to information security †¢ increase in the compliance requirements of nformation and privacy-related regulation. A key benefi t of an effective, integrated IT governance framework is the integration of IT into the strategic and overall operational approach of an organisation. There are a series of international Information Security (IS) standards that provide guidance on implementing an effective IT governance framework, known as the ISO 27000 series. For example, ISO/IEC 27001 defi nes a set of IS management requirements in order to help organisations establish and maintain an IS management system. The standards apply to all types of organisation regardless of size or sector.They are particularly suitable where the protection of information is critical to the business, for example in t he fi nance, health and public sectors, and for organisations which manage information on behalf of others, such as IT outsourcing companies. ISACA also offers a series of IS standards and certifi cation. ISACA is a leading global association in the IT governance and control fi eld. With a network across more than 160 countries, its IS standards are followed by practitioners worldwide. Figure 3 The CIMA risk management cycle Controls assurance Controls assurance is the process whereby controls are eviewed by management and staff. There are various ways to conduct these exercises, from highly interactive workshops based on behavioural models at one end of the spectrum to pre-packaged self audit internal control questionnaires at the other. These models all include monitoring and risk assessment among their principal components. 19 The risk management cycle is an interactive process of identifying risks, assessing their impact, and prioritising actions to control and reduce risks. A n umber of iterative steps should be taken: 1 Establish a risk management group and set goals. 2 Identify risk areas. Understand and assess the scale of risk. 4 Develop a risk response strategy. 5 Implement the strategy and allocate responsibilities. 6 Implement and monitor the suggested controls. 7 Review and refi ne the process and do it again. 2. 3 The risk management cycle Identify risk areas Review and refi ne process and do it again Implementation and monitoring of controls Implement strategy and allocate responsibilities Understand and assess scale of risk Develop risk response strategy Information for decision making Establish risk management group and set goals Fraud risk management: a guide to good practice 20 2. Establish a risk management group and set goals A risk management group should be established whose task it is to facilitate and co-ordinate the overall risk management process. Possible members of the group could include a chief risk offi cer, a non executive direc tor, fi nance director, internal auditor, heads of planning and sales, treasurer and operational staff. Depending on the size and nature of the organisation, the risk management group may be in the form of a committee who meet from time to time. The risk management group will promote the understanding and assessment of risk, and facilitate the evelopment of a strategy for dealing with the risks identifi ed. They may also be responsible for conducting reviews of systems and procedures to identify and assess risks faced by the business, which include the risk of fraud, and introducing the controls that are best suited to the business unit. However, line managers and their staff may also be involved in the risk identifi cation and assessment process, with the risk management group providing guidance. 2. 5 Identify risk areas Each risk in the overall risk model should be explored to identify how it potentially evolves through the organisation.It is important to ensure that the risk is c arefully defi ned and explained to facilitate further analysis. The techniques of analysis include: †¢ workshops and interviews †¢ brainstorming †¢ questionnaires †¢ process mapping †¢ comparisons with other organisations †¢ discussions with peers. Once risks have been identifi ed, an assessment of possible impact and corresponding likelihood of occurrence should be made using consistent parameters that will enable the development of a prioritised risk analysis. In the planning stage, management should agree on the most appropriate defi nition and number of categories to be used when ssessing both likelihood and impact. The assessment of the impact of the risk should not simply take account of the fi nancial impact but should also consider the organisation’s viability and reputation, and recognise the political and commercial sensitivities involved. The analysis should either be qualitative or quantitative, and should be consistent to allow compa risons. The qualitative approach usually involves grading risks in high, medium and low categories. Impact The assessment of the potential impact of a particular risk may be complicated by the fact that a range of possible outcomes may exist or that the risk may occur number of times in a given period of time. Such complications should be anticipated and a consistent approach adopted which, for example, may seek to estimate a worst case scenario over, say, a 12 month time period. Likelihood of occurrence The likelihood of a risk occurring should be assessed on a gross, a net and a target basis. The gross basis assesses the inherent likelihood of the event occurring in the absence of any processes which the organisation may have in place to reduce that likelihood. The net basis assesses the likelihood, taking into account current conditions and processes to mitigate he chance of the event occurring. The target likelihood of a risk occurring refl ects the risk appetite of the organisa tion. 2. 6 Understand and assess the scale of risk 21 Where the net likelihood and the target likelihood for a particular risk differ, this would indicate the need to alter the risk profi le accordingly. It is common practice to assess likelihood in terms of: †¢ high – probable †¢ moderate – possible †¢ low – remote. An example of a risk analysis is contained in Appendix 3. The resulting document is often referred to as a risk register. The overall risk registers at organisational nd operational levels should include the risk of fraud being perpetrated. Some organisations also prepare detailed fraud risk registers that consider possible fraudulent activity. The fraud risk register often directs the majority of proactive fraud risk management work undertaken by an organisation. Analysing fraud risks Fraud risk is one component of operational risk. Operational risk focuses on the risks associated with errors or events in transaction processing or ot her business operations. A fraud risk review considers whether these errors or events could be the result of a deliberate act designed to benefi t the perpetrator.As a result, fraud risk reviews should be detailed exercises conducted by teams combining in depth knowledge of the business and market with detailed knowledge and experience of fraud. Risks such as false accounting or the theft of cash or assets need to be considered for each part of the organisation’s business. Frequently, businesses focus on a limited number of risks, most commonly on thirdparty thefts. To avoid this, the risks should be classifi ed by reference to the possible type of offence and the potential perpetrator(s). Fraud risks need to be assessed for each area and process of the business, for example, cash payments, ash receipts, sales, purchasing, expenses, inventory, payroll, fi xed assets and loans. Fraud risk management: a guide to good practice 22 2. 7 Develop a risk response strategy Once the ri sks have been identifi ed and assessed, strategies to deal with each risk identifi ed can be developed by line management, with guidance from the risk management group. Strategies for responding to risk generally fall into one of the following categories: †¢ risk retention (e. g. choosing to accept small risks) †¢ risk avoidance (e. g. stopping sale of certain products to avoid the risk to occurring) †¢ risk reduction (e. g. hrough implementing controls and procedures) †¢ risk transfer (e. g. contractual transfer of risk; transferring risks to insurers). Before strategies are developed, it is necessary to establish the risk appetite of the organisation. Risk appetite is the level of risk that the organisation is prepared to accept and this should be determined by the board. The appetite for risk will infl uence the strategies to be developed for managing risk. It is worth noting that a board’s risk appetite may vary for different types of risk and over tim e. For example, the board may have a low risk tolerance on compliance and egulatory issues, but be prepared to take signifi cant strategic risks. The board may also reduce their risk appetite as the external environment changes, such as in times of recession. 2. 8 Implement the strategy and allocate responsibilities The chosen strategy should be allocated and communicated to those responsible for implementation. For the plan to be effective it is essential that responsibility for each specifi c action is assigned to the appropriate operational manager and that clear target dates are established for each action. It is also important to obtain the co-operation of those esponsible for the strategy, by formal communication, seminars, action plans and adjustments to budgets. The chosen strategy may require the implementation of new controls or the modifi cation of existing controls. Businesses are dynamic and the controls that are in place will need to be monitored to assess whether or n ot they are succeeding in their objectives. The risk management group should be empowered to monitor the effectiveness of the actions being taken in each specifi c area, as these can be affected by internal and external factors, such as changes in the marketplace or the introduction of new computer systems. . 10 Review and refi ne and do it again All of the elements outlined above form part of an iterative cycle where risk management is continually reviewed and developed. As the cycle continues, risk management should increasingly become embedded in the organisation so that it really becomes part of everyone’s job. 2. 11 Information for decision making Risk management should form a key part of the organisation’s decision-making process. Information is gathered at all stages of the risk management cycle and this information should be fed into the decision-making mechanisms. For more information on risk management, please refer o CIMA’s publication Risk Management : A guide to good practice. 2. 9 Implement and monitor suggested controls 23 There are risks in most situations. Risk management is an important element of corporate governance and every organisation should review their risk status and develop their approach as described in the CIMA Risk Management Cycle in 2. 3 to 2. 11 above. Managing the risk of fraud is the same in principle as managing any other business risk. First, the potential consequences of fraud on the organisation need to be understood, using the principles set out in this chapter. The risks should then be reduced by developing nd implementing an anti-fraud strategy across the organisation. This is best approached systematically, both at the organisational level, for example by using ethics policies and anti-fraud policies, and at the operational level, through introduction of controls and procedures. The following chapters expand on the fraud risk management process in the context of an antifraud strategy. 2. 12 Summar y Fraud risk management: a guide to good practice Given the prevalence of fraud and the negative consequences associated with it, there is a compelling argument that organisations should invest time and resources towards tackling fraud.There is, however, sometimes debate as to whether these resources should be committed to fraud prevention or fraud detection. Fraud prevention Based on the earlier discussion aroun

An Elephant Vanishes Essay

Explain the role of the kitchen in â€Å"Like Water For Chocolate† by Laura Esquivel and â€Å"The Elephant Vanishes† by Murakami. In Like Water for Chocolate by Laura Esquivel, food and the kitchen is a means of expressing a range of human emotions. Like Water for Chocolate opens with its most important central setting, the kitchen. Onion-induced weeping quite literally sweeps the protagonist, Tita, into the world, as she is born in the kitchen, crying, amidst of flood of her mother’s tears. Her mother, Mama Elena, is unable to produce milk (due to shock at the recent death of her husband) and Mama Elena gives Tita almost immediately to the house cook, Nacha, who rears the child in the kitchen. Surrounded by the colours, smells, and routines of Nacha’s kitchen, Tita grows up understanding the world in terms of food. She enjoys her isolation in the domain of the kitchen. â€Å"Thanks to her unusual birth, Tita felt a deep love for the kitchen where she spent most of her life from the day she was born† page 10, paragraph two. The story of Tita’s entry into the world marks the first fantastical image of Like Water for Chocolate, initiating the reader into the novel’s magical realism and illustrating the intensity and improbability that characterise the events of the story. The image of Tita flowing into the world in a flood of tears prefigures the sadness and longing that will pervade her life. After Tita’s birth, the flood of tears dries to leave ten pounds of salt to be collected and used for cooking. The practical attitude with which the characters greet this surreal happening helps to establish the supernatural as an accepted part of the characters’ lives. â€Å"Nacha swept aside the residue the tears had left on the red stone floor, There was enough salt to fill a ten-pound-sack- it was used for cooking and lasted a long time† page 10, paragraph two. Outside the kitchen, Tita follows the demanding regime that Mama Elena sets for her daughters. Life is full of cooking, cleaning, sewing, and prayer. This routine is interrupted one day by Tita’s timid announcement that a suitor, Pedro Muzquiz, would like to pay her a visit. Mama Elena greets this announcement with indignation, invoking the De La Garza family tradition that the youngest daughter is to remain unmarried so that she can care for the matriarch in the matriarch’s old age. Tita is dismayed by this rigid tradition. Outwardly, she submits to Mama Elena’s wishes, but privately she questions the family tradition and maintains her feelings for Pedro. â€Å" you don’t have an opinion Tita and thats all I want to hear about it. For generations, not a single in my family has ever questioned this tradition and no daughter of mine is going to be the one to start† page 15, paragraph 3 This cold hearted appraoch to Titas yearning for marriage is what makes Tita retreat into the safe realm of the ktichen, I think the reason why magic realism was applied to food is because of how universal it is. Whereas music and art only apply to some of us, food is in all of our lives. Since magic realism is all about mixing the magic with what’s real, food is the ideal choice. We’ve all heard of metaphors exaggerating the taste of food, but Laura Esquivel’s descriptions of the effects of food are much more elaborate. It’s so descriptive that sometimes we doubt our ideals of what’s real by reading the effects of the recipes. By using food as the medium the author was able to smoothly meld together the magical and real aspects of each chapter. Her isolated childhood in the kitchen gives Tita an outlook on life different from that of her sisters, Gertrudis and Rosaura, and she comes to develop different ideals for herself as she matures. As a young woman, Tita rebels against the family tradition that confines her to a life without love. Her insistent questioning (even though she does not petition Mama Elena directly) of her lot in life can be identified as one of the feminist impulses in the novel. This refusal to accept an assigned and undesirable social role marks the beginning of Tita’s path to self-assertion and freedom. Her love for the kitchen and cooking is a rebelious action against her mother, her realm of the kitchen is the only thing that her mother can not control or do, the kitchen is what keeps her sane from the depressing sitution on the other side of the door. it wasn’t easy for a person whose knowledge of life was based on the kitchen to comprehend the outside world. That world was an endless expanse that began atthe door between the kitchen and the rest of the house, whereas everything on the kitchen side of that door, on through the door leading to the patio and the kitchen and herb gardens was completely hers-it was Tita’s realm. † This quotes proves my point above, the kitchen door acts as a safe guard to the oppressive realm of her mother’s. In an Elephant vanishes one of the major themes of the story is the idea of things being out of balance. This theme is introduced when the narrator tells the editor about the importance of unity in kitchen design, as he states, â€Å"Even the most beautifully designed item dies if it is out of balance with its surroundings. † The narrator later emphasizes the importance of balance between a creature and its environment when he talks about witnessing the change in the elephant’s size in relation to the keeper’s size. He states that the balance in size between the two has become more equal, because the elephant has shrunk or the keeper has gotten bigger, or both. Following the disappearance of the elephant and the keeper, the narrator again expresses the idea that â€Å"things around me have lost their proper balance. † He is no longer able to take action on his own behalf, as he is haunted by this sense that the urban world is out of balance, and he feels that a kind of natural balance has broken down inside him. The imbalance between Tita’s kitchen and outside the kitchen can relate to the elephant vanishes. Tita fells safe in the kitchen and at peace with the â€Å"old† kitchen keeps her in balance. Related to the theme of imbalance is the difference between appearances and reality. The narrator points out that the article covering the story of the elephant’s disappearance is strange, because the reporter tries so hard to maintain that the elephant escaped, when the facts indicate that the elephant had to have almost magically vanished. The characters in the story try to maintain an appearance of normality in the face of an event that defies logic, leading to pointless acts that do not address the nature of the situation. The discrepancy between reality and appearances also arises in the narrator’s job as he basically just goes through the motions, trying to maintain a professional, pragmatic approach although he does not personally believe that a kitchen has to have unity or any of the other maxims his company invokes to sell its products. The narrator finds that he cannot reconcile the differences between appearances and reality, and as he questions his own perceptions, he experiences a sense of disorientation and confusion. Throughout the story, Murakami subtly reveals how the vanishing of the old ways leaves people feeling disoriented and how the new ways of being create a sense of disconnection and unease. This can be said about Mama in â€Å" Like water for chocolate† as she is does not like the idea of Tita marrying . She is scared of modern society perhaps, and is insecure about her future. Mamas death The narrator, for example, performs his job as a public relations executive successfully by espousing the commercial viewpoint that â€Å"things you can’t sell don’t count for much. Because in truth he does not necessarily believe this statement, saying it and operating from this pragmatic mode seem to confound the narrator, confusing him about his purpose in life. Like other Murakami characters, he is also a loner, a single person, living alone with no apparent ties to family or friends also this can be said to Mama Elena, she has distanced herself from her loved ones through t he death of her grand child and of the cruelty committed to Tita . The narrator watches the elephant and the keeper and marvels at their closeness, their special bond. In the wake of the elephant’s disappearance, the narrator feels despondent, more isolated and alone than ever. As is Tita at the end of the novel after Pedro dies. â€Å" Now it would never again be possible to see that light, because she could no longer feel anything. She would but wander through the shadows for eternity, alone, all alone. †