Creating a Due Diligence Culture #2

Written by Martin Phillips

When a white paper called “Principles of Procurement Fraud Prevention”, was released to the public, there were five fundamental principles outlined that were necessary for fraud prevention. These five principles were about anti-fraud culture, due diligence culture, defending against social engineering, leveraging information technology to increase protection, and finally, investigating and assessing risk levels and current controls.

This blog is the second in a five-blog series, which will discuss each of the concepts outlined in the white paper. This block will be about due diligence culture and its role in fraud prevention within a corporate setting.

What is Due Diligence Culture? 

Due diligence culture is all about making sure that you perform thorough checks and investigations for all of the staff to work in your organisation, but also every partner you work with outside the workplace. This means suppliers, partnerships with other businesses, investors, and shareholders, and anybody who might come into contact with the organisation. It is this thorough process which helps to prevent fraud from taking place.

How to Cultivate a Due Diligence Culture 

When it comes to due diligence culture, it’s important to make sure that you are focused and actively searching for roles and areas where fraud is more likely to occur.

For example, it’s all about knowing your employees. What kind of vetting process do you have for your staff? There are many positions where it is necessary to perform enhanced vetting processes like legal staff, key finance positions, anti-fraud personnel, physical security staff, high-ranking HR team members, board members, and other roles besides.

It is also recommended that you have a firm understanding of how your suppliers function. Do they have their own due diligence process for the companies that they work with? How long have they been in business? Has the company experienced any financial or other issues in the past? Does the board of directors seem legitimate? Have all the key positions in the company been filled by reputable businesspeople?

You should also make sure that the person who is approaching you as a business partner actually comes from the company they claim to be. Ask for a landline or extension number, check email addresses against who they are, and perform these basic checks to make sure that the people you are trying to work with are actually who they claim to be.

Final Thoughts

Creating a due diligence culture can be important. You cannot afford to be complacent when it comes to fraud prevention, and many people are often not who they claim to be. It is important to try and focus on doing rigorous, detailed investigations into the people you hire and the people you work with. This is just one of the blogs that we have created about fraud prevention, so please feel free to check out the first blog in the series or check out our next one to get more information about one of the key principles for fraud prevention.

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