Applying forensic auditing in banks

There are multiple reasons behind increasing frauds in the banking sector. Though the fraud control units are supposed to look into various facets of the frauds, in most of the private sector banks it was observed that the focus of fraud control units remained on Credit card frauds. Birth of technology has made all the bankers afraid but the traditional areas of defrauding can not be ignored simply because the technology tools are misused.

Indiaforensic conducted a survey in the year 2008 and it was observed that more than 90% of the employees working in the fraud control units of various banks were performing the act of investigating the frauds only by virtue of their occupation. They never underwent the training for the investigation of the frauds. To shape the career in the antifraud domain the employee should have various competencies like analytical mind, strong grapevine, communication skills, and capacity to apply number of technology tools to retrieve the data from the computer boxes.

With the RBI circular, many bankers will have question mark on their faces with respect to Forensic Audit. It is a new term which literally means auditing for the frauds. When you are auditing for the frauds there will be no direction for the audits. In such case it is essential to understand the early warning signals of the bank frauds. An early warning signal is a set of circumstances that are unusual in nature or vary from the normal activity. It is a signal that something is out of the ordinary and may need to be investigated further. These warning signals are the triggers for the forensic auditing work.

Consider the example of the regular loan fraud. Continuously overdrawn cash credit limits, non-submission of the stock statements, stale items in the stock statements, unclear title of the inventory items are some of the common early warning signals which should act as the trigger for the bankers. It is essential for the forensic auditors to understand all such possible warning signals of fraud.

In Sepetmeber’2008, Indiaforensic, has concluded the widely publicised study on the Early Warning Signals of Corporate Frauds.This study is the base of forensic audit. Any forensic audit will need the compilation of the early warning signals. For the first time in the history of our country some regulator has emphasised the need of forensic auditing.

This is a good start of the profession and we are comitted to deliver the better results. Those bankers who are willing to improve the productivity of their antifraud resources are welcome to discuss the training needs with the “Team Indiaforensic”.

RBI has discussed the need of forensic auditing in this circular at the same time it also requires the CEO’s of the banks to reduce the frauds. Frauds can be reduced if the number of frauds can be prevented by the internal team of antifraud experts. Hence it is essential for the bankers to understand the competencies available with the banks in-house.

TEam Indiaforensic can help the bankers to improve the in-house productivity of its antifraud function. Indiaforensic has the three stage approach in fighting the frauds.

  • Understand the skills available with the anti-fraud team
  • Fill in the gaps with training programs and education to the employees
  • Test the skills of the employees post training

This approach is the mix of Human Resource and Anti-fraud skill sets which is very unique to Team Indiaforensic.

For any querries related to “RBI and Fraud Risk” write us at abhijeet@indiaforensic or call us on 9766594401

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