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Fraud Risk Management

Corporate Fraud Investigations & Assessments - The risk of fraud is present in almost every business regardless of size, shape, and complexity and could be perpetrated by an employee, a vendor, a client, or even a member of the Board. Fraud scenarios could be quite varied and concealed by complex and sophisticated strategies. While fraud is often “detrimental” with employees, vendors, or clients bleeding company assets, it can also be “beneficial” when executives artificially inflate company financial statements. It is critically important that corporate Fraud Risk Management strategies keep pace with the evolving and increasing fraud risk.

Forensic Due Diligence - As investments in emerging markets are rising, investors face innumerable kinds of fraud, including inflated or cooked-up growth stories forming the basis of valuation. Promoters also sometimes divert investors’ funds for personal purposes. Such instances of fraud and investors’ need for greater reliance on the financial information of the target has led to forensic accounting becoming an integral part of due diligence. Compared to financial due diligence, which entails a top-down review of audited/management financial statements, forensic due diligence involves a bottom-up approach with the primary focus on the underlying transactional data. Leveraging their experience of investigations and real-life fraud scenarios, forensic accountants build multiple fraud hypotheses applicable to the sector or industry of the target, which are applied to the voluminous transactional data. These analyses help in identifying red flags, which may indicate potential issues such as inflation of revenues, potential diversion of funds, the existence of accommodation transactions, non-existent vendors/customers, issues of conflict of interest, anomalies in related party transactions or undisclosed related parties. Depending on the nature of the red flag, further procedures, such as review of supporting documents for transactional data, site visits to validate existence, public domain checks or market intelligence gathering, may be performed.

Process Audits & Process Reviews - Every successful audit is based on sound planning and an atmosphere of constructive involvement and communication between the client and the auditor. In general, the audit process is designed to provide a resource for sharing tools and techniques for each of the distinct phases of the audit process. Understanding the scope of work and constraints, requesting for documents and reviewing current processes which is followed and reviewing relevant documents and analysing of data and discussion with management on key gaps before we release the final report..

Mystery Shopping - Mystery shopping is a method used by companies to gather data or measure quality of service, or to check compliance (in case of regulator), or to gather specific information about products or services. Mystery shoppers perform specific tasks such as purchasing a product, asking questions, registering complaints, or behaving in a certain way, and then provide detailed reports or feedback about their experiences. It allows management to gather relevant, reliable and quality data from a customer’s viewpoint and is an invaluable tool for businesses seeking to appraise its values and act accordingly.

Whistle Blower/Vigil Mechanism – As per sub-section (9) of section 177 of the companies act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 provides that the following certain Companies are required to establish a vigil mechanism, these companies are (a) which accepts deposits from the public; (b) company which has borrowed money from banks and public financial institutions in excess of Rs. 50.00 (Fifty) Crores. (c) all listed companies have to compulsorily adopt “The Code” a Code of Conduct for Directors and Senior Management Executives, which lays down the principles and standards that should govern the actions of the Company and its employees. Any actual or potential violation of the Code, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. Vigil Mechanism shall provide for adequate safeguards against victimization of persons who uses such mechanism and also make provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of its business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of any nature whatsoever, or fear of any unfair treatment. A vigil mechanism provides a channel to employees and Directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or any Policy of the Company. concerns regarding malpractices and events which may negatively impact the company such as (i) Inaccuracy in maintaining the Company’s books of account and financial records. (ii) Financial misappropriation and fraud. (iii) Procurement fraud. (iv) Conflict of interest. (v) False expense reimbursements. (vi) Misuse of company assets & resources. (vii) Inappropriate sharing of company sensitive information. (viii) Bribery & Corruption. (ix) Insider trading. (x) Unfair trade practices & anti-competitive behaviour. (xi) Non-adherence to safety guidelines. (xii) Sexual harassment. (xiii) Child Labour. (xiv) Discrimination in any form. (xv) Violation of human rights. (xvi) and any other matters or activities on account of which the interest of the Company is affected.

Anti Bribery & Corruption Compliance - Anti bribery and corruption compliance (also called as ABC compliance) is important to organisations because non-compliance can bring significant risks. It is also important because bribery and corruption disempower people and destroys economic growth and opportunity. To prevent such harm and contribute positively to the growth of society, you must have an ongoing anti-bribery and corruption compliance procedures in place. If you do not have one, you must put one in place. If you do already have one, there is nothing wrong with improving it.

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