SPECIAL RISKS 101

Fraud

Changes in the business environment may lead to new opportunities for employees to commit fraud.

Layoffs, reduced hours and other financial pressures may drive some employees to commit fraud.

Past and ongoing frauds may come to light as management has time to review previous transactions and perpetrators have fewer opportunities to cover their tracks while working remotely.

A rush toward new business opportunities may get in the way of adequate due diligence and open the door to bribery.

Thefts

A rapid shift to remote working means fewer workers on site and more opportunities for inventory, computers and equipment to disappear.

Departing employees may steal business ideas and commercialize them into products and services.

How businesses can mitigate increased fraud, theft, misconduct and business disputes in the wake of COVID-19.

As the pandemic continues to spread, organizations are understandably worried about the economic fallout, adjusting to new work arrangements and ensuring their teams remain healthy and safe.

However important these measures are, leaders cannot lose sight of critical controls to manage these special risks — especially as new threats emerge and existing threats are reshaped by the new landscape.

• Business owners, employees, customers and vendors are all facing increased financial pressures.
• Many businesses are operating with a drastically reduced workforce.
• Seizing new opportunities often requires rapid procurement and solutions deployment.
• Businesses have had to rapidly change processes to respond to their new environment.

As you continue to adapt to your organization’s new normal, strive to keep these present concerns top of mind.

Employee Misconduct

Reduced supervision may create opportunities for team members to falsify time reporting about their activities.

Remote working may cause team members to breach policies and misuse corporate computers, mobile phones or other devices.

Increased stress may increase instances of employee conflict, bullying and harassment.

Business Disputes

Disruption of customer and vendor relationships may lead to breaches of contract and legal action for violating terms and conditions. Increased personal and professional stress may lead to a greater number of shareholder disputes and litigation.

Departing managers may poach customers and divert business opportunities requiring businesses to sue to protect their interests.

Contact

Business owners always need to be vigilant about the ever-present threat of fraud and misconduct — but even more so in the current dynamic and unpredictable environment. Reach out to a member of MNP’s Forensics and Litigation Support team today to reduce your risk and protect your business.

Rob Fowlie, CPA, CA, CFE, IFA
Toronto Practice Leader, Forensics and Litigation Support
416.515.3802
[email protected]

Lisa Majeau Gordon, FCPA, FCA, CA-IFA, CFE, CFF
National Leader, Forensics and Litigation Support
780.451.4406
[email protected]