Anti-Fraud Management Assessment

Fraudulent accounting, embezzlement, market manipulation or organized fraud: Economic crime (fraud) is committed in almost one in two companies. This is the finding of PwC’s Global Economic Crime Survey 2020. The legislator is currently preparing a range of laws in order to combat these types of offences more efficiently.

This will make the statutory requirements regarding corporate governance and the introduction of a whistleblower system more stringent and the legal (and criminal) consequences for criminal actors and companies more severe. This is intended to strengthen companies’ integrity, as well as that of the German financial market.

Your expert for questions

Bernd Reimer

Bernd Reimer
Partner, Forensic Services at PwC Germany
Tel: +49 175 2937362

Eliminate weaknesses, ensure compliance

For all companies, regardless of their size and industry, there is no avoiding it: In the future, they will have to pay close attention to the measures they have in place to protect against fraudulent activities – for instance, by strengthening their internal control system (ICS) and introducing effective whistleblower systems. These measures will be essential if they are to meet the (future) statutory requirements.

“More than ever, corporate management and the supervisory board must ensure that their company has an appropriate and, in particular, an effective, Anti-Fraud Management System in place.”

Bernd Reimer,Partner, Forensic Services at PwC Germany

Why there is no way around implementing an effective Anti-Fraud Management System for companies

  • Listed companies are obliged to establish an effective internal control and risk management system.
  • The requirements for the members of the supervisory board and the audit committee have been qualitatively expanded.
  • In the future, the Federal Financial Supervisory Authority will have extended investigatory powers and access rights to companies, for instance in the form of search and seizure rights.
  • Companies are obliged to establish independent, internal hotlines and reporting channels for anonymous tips and must also take follow-up measures.
  • The company’s management and supervisory board face higher penalties for breaches of accounting regulations.
  • In addition to the imposition of fines of up to 10 percent of the annual group revenue against the company and penalties against its managers, there is also the risk of profit skimming.

The solution: Anti-Fraud Management Assessment

Does your company have an effective Anti-Fraud Management System? How do you measure its effectiveness? Have you established a whistleblower system? Can employees or customers provide anonymous tips if there is a suspicion of fraud? How strong is your anti-fraud protection system compared with that of your competitors?

With the modular Anti-Fraud Management Assessment, PwC experts support you in evaluating the maturity of your measures to protect your company against fraud. Our solution consists of three elements and combines proven standards and methods with modern approaches from the field of artificial intelligence (AI).

The aim is to identify potential for improvement in the interaction between the various stakeholders in your fraud ecosystem – in other words, the supervisory board, corporate management, compliance or risk management, internal audit, and auditors.

As part of the assessment, we will test selected structures, processes and controls in your company that are vulnerable to fraud. Here we rely on the experience we have gained over many years, particularly in the area of special investigations, and take account of proven best practice methods.

Our approach

Indicator-based fraud analysis

We identify fraud patterns by examining “red flags”. Therefore, we use mathematical and statistical analyses, data mining and advanced analytics.

We scan industry-specific balance sheet figures based on existing data sources. In order to identify anomalies, we compare the information with a peer group and analyze the data over time. Thereby, we compare the indicators from the current annual financial statements with the historical figures for the previous five years.

AI-based risk intelligence

We identify potential reputation and compliance risks by continuously scanning events around the globe. Therefore, we use the world’s largest publicly accessible news database and prepare analyses for you based on artificial intelligence (AI). Thereby, we select the topics individually for your company.

Among other things, our smart tools allow the AI-based monitoring of relevant topics and the identification of trends. We can also flag emerging risks by monitoring negative sentiments.

Experience-based assessment of the status quo

Our experts perform a qualitative assessment of the status quo and of the efficiency of your Anti-Fraud Management. Therefore, we use an anti-fraud questionnaire that has been tailored to your company as well as selected target groups and employees (supervisory board, management board, compliance, internal audit and others). This questionnaire is based on the seven field-tested elements of a compliance management system. In this way, the experts can determine the adequacy of your fraud prevention – and you can identify strengths and weaknesses and begin to address deficiencies in a targeted way.

Your benefits

  • You obtain a fraud-specific benchmark view of the measures and controls that have been put in place in your company. You benefit from our best-practice approach and our many years of experience.
  • Based on the assessment of the maturity level of your Anti-Fraud Management, you have the opportunity to address the deficiencies we have identified accordingly. In this way, you can eliminate the weaknesses as quickly as possible and improve both your internal control system (ICS), your risk management system and your compliance management system (CMS) in a targeted way by taking effective fraud prevention measures.
  • These analyses enable you to be a pioneer in taking innovative approaches to fraud prevention, detection and investigation. This helps you to mitigate future financial damage to your company.
  • Thanks to the insights you obtain during the Anti-Fraud Management Assessment and the consequences you derive from them, in the event of subsequent investigations by the authorities you will be able to prove that your company has tackled fraud risks in detail and addressed them. Corresponding activities can be taken into account as mitigating factors in assessing penalties and fines.

“With the insights from our analysis, companies are able to eliminate weaknesses in their fraud prevention and meet the more stringent regulatory requirements that now apply in terms of corporate governance.”

Bernd Reimer,Partner, Forensic Services
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Contact us

Bernd Reimer

Bernd Reimer

Partner, Forensic Services, PwC Germany

Tel: +49 175 2937362

Julian Schwarz

Julian Schwarz

Senior Manager, Forensic Services, PwC Germany