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Reconcile records

Type of countermeasure

This is a detection countermeasure. Detection countermeasures can help to identify when fraud has occurred. They can help disrupt additional fraud and reduce the consequences.

Summary

Reconcile records to make sure that two sets of records (usually the balances of two accounts) match. Reconciling records and accounts can detect if something is different from what is standard, normal, or expected, which may indicate fraud.

Why this countermeasure matters

Lack of record and account reconciliation may led to:

  • fraudsters feeling more confident their actions will not be detected
  • high levels of non-compliance or errors due to inconsistent and unclear processes, rules and decision-making
  • less transparency over the actions and decisions of staff and third parties
  • fraud or corrupt activity going unnoticed or unchallenged.

How to put this countermeasure in place

Some ways to implement this countermeasure include reconciling records by comparing:

  • travel approvals each month with the trips booked using a travel vendor
  • credit card expenses with receipts
  • overtime budgets against spending
  • assets ordered versus assets received.

How to measure this countermeasure's effectiveness

Measure the effectiveness of this countermeasure by applying the following methods:

  • Confirm that the reconciliation is segregated from the processing. Make sure that one staff member cannot process and reconcile the same activity.
  • Review who has access to complete reconciliations.
  • Walk through the process with a staff member while they complete a reconciliation.
  • Confirm a consistent reconciliation process exists.
  • Confirm that records cannot be manipulated.
  • Review the process to determine if it would identify different methods of fraud.
  • Conduct interviews, workshops or surveys with staff who complete reconciliations to measure their understanding and thoughts about fraud control policies.
  • Check if and how reconciliation results are reported.

Related countermeasures

This type of countermeasure is supported by:

Establish governance, accountability and oversight of processes by using delegations and requiring committees and project boards to oversee critical decisions and risk. Good governance, accountability and oversight increases transparency and reduces the opportunity for fraud.

Rotate staff and contractors in and out of roles to avoid familiarity. Staff and contractors can become too familiar with processes, customers or vendors, which can lead to insider threats.

Separate duties by spreading tasks and associated privileges for a business process among multiple staff. This is very important in areas such as payroll, finance, procurement, contract management and human resources. Strong separation of duties controls are enforced by systems. It is also known as segregation of duties.

Automatically match data with another internal or external source to obtain or verify relevant details or supporting evidence. This countermeasure is supported by the Office of the Australian Information Commissioner's Guidelines on data matching in Australian government administration.

Conduct internal or external audits or reviews to evaluate the process, purpose and outcome of activities. Clients, public officials or contractors can take advantage of weaknesses in government programs and systems to commit fraud, act corruptly, and avoid exposure.

Related Fraudster Personas

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