Financial Executives International has teamed up with the Center for Audit Quality, the Institute of Internal Auditors and the National Association of Corporate Directors on a new anti-fraud quiz.
The Fraud Literacy Quiz is available on FEI’s Web site at www.financialexecutives.org/fly/fraudliteracyquiz. The quiz is open to the public and includes a series of questions to assess people’s knowledge on topics related to deterring and detecting financial reporting fraud. Many of the 23 questions in the quiz relate to a feature article in the November issue of Financial Executive magazine, "Financial Reporting Fraud: Prevention Starts at the Top," which is available online at http://www.financialexecutives.org/fly/Fraud_Literacy_Mag.
FEI is also offering free CPE credit to members and nonmembers who read the article and successfully answer questions at the end about its content. According to FEI president and CEO Marie Hollein, it’s a rare instance of the group offering CPE credit to nonmembers. Links to the quiz also will appear on the partner organizations’ Web sites.
“Each organization is offering one CPE credit for those who read the article and complete the related CPE questions,” said Hollein. “The fraud literacy quiz itself does not offer CPE, whereas the completion of the magazine article and the related CPE questions are for one CPE credit.”
The online fraud quiz is the first in a series of tools that the groups plan to unveil to combat financial fraud.
The quiz is part of an ongoing effort by the organizations to crack down on financial fraud in the corporate world. Last year, the CAQ released a study on deterring and detecting financial fraud and the groups followed up with meetings with corporate leaders around the country. They found three common themes: the importance of setting the right tone at the top of an organization that fraud is discouraged, the need for professional skepticism, and the necessity for communication between management, the board, and internal and external auditors.
“We all hear about tone at the top, but what does it actually mean?” said CAQ executive director Cindy Fornelli. “It’s this ethical culture that has to permeate the entire organization. It’s really not just tone at the top. It’s set by the leaders of the organization, not only the CEO and CFO, but also the audit committee, internal audit and the external auditors as well.”
“Internal audit is essential to governance,” said IIA vice president of North American services Hal Garyn. “Serving management and boards, internal auditors have a very important role to play in assisting their organizations with fraud awareness, fraud deterrence and fraud detection.”
Michele Hooper, a CAQ governing board member and NACD board member as well as president and CEO of the Directors’ Council, said the projects would help the organizations develop techniques to enhance the application of objectivity and skepticism. “Working together, we think we’ll have the opportunity to be more effective at raising awareness, as well as reducing the risk of fraud, which can result in a loss of confidence in our financial markets and lead to losses in shareholder value, and in some cases to the bankruptcy of the company itself,” she said.
Board directors need to be concerned about how management is dealing with reports of fraud. “There are going to be incidents that occur on an ongoing basis within a company that the board of directors should know about and can find ways to know about,” said NACD board member Peter Clapman. “How the management deals with those situations, how the board of directors in effect directs if they have any concerns about how management is dealing with these issues about tone at the top, that’s something that the board of directors is in a unique position to enforce.”
The groups are also monitoring how well the new whistleblower provisions in the Dodd-Frank bill are working, whether it involves tips called in to an internal compliance hotline at a company or to the SEC’s whistleblower program.
“The literature time and time again shows that the biggest way to uncover fraud is through a tip,” said Fornelli. “And on the other hand, there is a tension where employees sometimes are hesitant to use a hotline because they worry about that anonymity, they worry about retaliation, they worry about whether this will be taken seriously.”
“There has to be a culture and an atmosphere where people are comfortable bringing their concerns forward and believing those concerns will be addressed in the organization,” said Hooper.
FEI has seen an uptick in companies outsourcing their hotlines since the passage of the Dodd-Frank Act with its whistleblower provisions. “We do see a number of our members that now have compliance groups and ethics groups in place and outsource that process to allow for anonymity,” said Hollein.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access