About Board and Fraud

Board and Fraud is a blog that aims to bring a practical approach to issues facing the board of directors and the audit committee specifically in the area of governance, risk management, compliance, and internal audit, with a strong focus on fraud, ethics, and internal controls.

Fraud Tip Friday: Lessons From Recent FCPA Enforcement Actions

The United States government’s fiscal year ended on September 30, 2019. Just as in the business world, where many companies try and clear out any unexecuted deals or open contracts, the Securities and Exchange Commission (SEC) cleared out three outstanding Foreign Corrupt Practices Act (FCPA) enforcement actions. The three enforcement actions involved Quad/Graphics Inc., a Wisconsin-based digital and print marketing provider, and its Peruvian subsidiary, Quad/Graphics Peru S.A.; Barclays PLC; and a Canadian clean fuel company Westport Fuels Systems, Inc. and its former Chief Executive Officer (CEO), Nancy Gougarty of Leesville, South Carolina. The terms of each settlement agreement provide a different lesson for compliance practitioners.

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Speaking and Training on Fraud, Compliance, Ethics, and More…

Welcome to my site. I have spoken and been the keynote speaker for many conferences, including the ABA, ACC, ACFE, IIA, and IMA to name a few. I have designed customized training for the board, senior leadership, legal, compliance, internal audit, and others for some of the world’s largest organizations.

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Fraud: Department of Justice (DOJ) Announces Procurement Collusion Strike Force

On November 5th, the Department of Justice announced the formation of the new Procurement Collusion Strike Force (PCSF) “focusing on deterring, detecting, investigating and prosecuting antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement, grant and program funding”.

The Strike Force is an inter-agency partnership comprised of prosecutors from the Antitrust Division, and prosecutors from thirteen (13) U.S. Attorneys’ Offices.  Aiding in the prosecutors’ efforts are investigation partners such as the Offices of Inspector Generals from the Department of Justice, Department of Defense, U.S. Postal Service, and General Services Administration Office. The Department of Justice’s announcement proclaimed that investigating and prosecuting those who “cheat, collude and seek to undermine the integrity of government procurement” will have more to concern themselves with when executing their crimes. Prosecutors and investigators alike expressed enthusiasm to be working as a part of this new team.

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Reputation Risk Management Doesn’t Have a Start or End Date!

How can we protect our brand? What are we doing to protect our brand? Questions all board members should be constantly asking.  Reputational risks can damage the most well-crafted business strategies and is a growing challenge that companies around the world are still learning how to manage.

By definition, reputational risk refers to the potential for negative publicity, public perception, or uncontrollable events to adversely impact a company’s reputation, thereby affecting its revenue.

Board directors covet their company’s reputation because it’s their most valuable asset. A study by Deloitte and Forbes affirmed this conviction, but should not surprise anyone.  Senior-level executives also agreed that their company’s reputation presented the greatest risk to the company’s ability to achieve business strategies.

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Skepticism – A Key Tool in the Fight Against Fraud

“Trust but verify” could be a downright dangerous approach when applied to audit procedures in particular. A much better slogan for fraud deterrence would be, “Trust is a professional hazard.”

The implication is that because financial management plays a leading role in detecting financial fraud, it is incumbent on executives – not just auditors – to exercise appropriate levels of professional skepticism. Board members and particularly audit committee members also must take care to exercise a skeptical approach to financial reports and supporting information.

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Crisis Management – Lights, Camera, Action!

Some of the biggest mistakes made when handling a crisis are not dealing with the problem head on, thoughtless or insincere comments, lack of communication with stakeholders, unprepared spokespeople, getting defensive after receiving backlash, or, sitting back and letting the problem grow. Domino’s, Sony, Samsung, BP, United Airlines, Equifax, KFC, are all good examples of companies who stumbled with crisis management.  Organizations should study these crises and learn from the mistakes!

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Hidden Assets and Illegal Payments

Stuffed animals, loose bricks in basement walls, mattresses, caves, hollow tree trunks, holes in the ground, and safe deposit boxes have provided hiding spots.

Today, hiding assets may be a much more sophisticated endeavor, often involving investments, banks, and overseas financial transactions.

Investigators should consider using a defined process to pursue matters that involve a search for hidden assets and illegal payments.

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Board Member Composition: Participants, Passengers, and Prisoners?

As the organization’s ultimate decision-making body, the board of directors plays two critical roles: overseeing management on behalf of shareholders and other constituencies; and advising management, albeit with limited involvement in everyday company operations – nose in, hands off! The board should not attempt to run the operations of the organization; it should oversee how management runs the company.

I am amazed at how many members literally are not engaged, which reminded that one of the traits of an effective leader, or Pilot, is being a good team builder. But how can you build a good team if you don’t understand the players?  I’m not speaking about understanding their skills, I am speaking about understanding their level of engagement.  That amorphous concept most ignore.

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Compliance Thought Leaders You Should Be Following

Compiling a list of thought leaders in ethics and compliance is fun, but so challenging. There are simply too many thoughtful people in this field — which is itself enormous and wide-ranging — to call out everyone worth following. So below is a small slice of the thinkers in corporate ethics and compliance that I try to follow.

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How Tight is Your Grip on Cash?

IIA you Awarded Winning Article

The treasurer of one of the largest oil companies in the United States recently learned the internal controls over the initiation of wire transfers were

Jonathan T. Marks, CPA, CFF, CFE

Partner, Firm Practice Leader – Global Fraud & Forensic Investigations, Compliance, & Integrity Services

Jonathan T. Marks is the original author and producer of Board and Fraud. He specializes in global and complex corporate investigations (White Collar Crime) and other investigations. He has 30+ years of experience working closely with clients, their board, audit committees, senior management, internal audit, compliance, legal & outside law firms on global and domestic fraud, misconduct, cyber incidents, bribery, money laundering, whistleblowers, retaliation matters, and conducting investigations when appropriate (10A, books and records, cross-border, FCPA, regulatory etc.). Jonathan determines economic damages, performs root cause analysis, develops remedial procedures, and designs and enhances governance, global risk management and compliance systems along with internal controls and policies and procedures. He also monitors tactics to mitigate future potential issues and testifies in the court-of-law when called upon. 

To learn more about what Jonathan T. Marks, or the Global Fraud and Forensic Investigation team and their services, select the button below.

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