Table I: Typical Internal Fraud Indicators
| Date(g): 18/12/2005 | Date(h): 18/11/1426 |
Table I: Typical Internal Fraud Indicators | |
| Business practices and conditions | |
| Governance and Organizational Structure | ◄ Single individual or group of individuals acting together drive operations and/ or financial decisions |
| ◄ Company’s strategy changes suddenly | |
| ◄ Organizational structure is complex | |
| ◄ Executive directors are numerous | |
| ◄ Directors, managers, members of staff, external businesses and contractors have conflict of interest | |
| ◄ Commission structures are unusual | |
| Operational Management | ◄ Training programs are weak |
| ◄ Transaction time, place, and parties are unusual | |
| ◄ Activities are inconsistent with the insurer’s stated policy | |
| ◄ Management turnover is high | |
| ◄ Staff turnover is high in financial and/ or accounting departments | |
| ◄ Obsoleteness or lack of procedural manuals | |
| ◄ Documentation for transactions, processes or expenses is limited | |
| ◄ Tasks and transactions are complex and require special skills | |
| Accounting and Finance | ◄ Assets are restructured without justification |
| ◄ Accounting procedures are weak | |
| ◄ Financial results and ratios are uncorrelated | |
| ◄ Share value changes without explanation | |
| ◄ Costs rise unjustifiably or are high compared to competitors | |
| ◄ Financial issues emerge | |
| Internal Control | ◄ Internal control structure is weak |
| Internal Audit | ◄ Information from prior audits is insufficient |
| ◄ Internal audits are weak or non-existing | |
| Information Technology | ◄ Data and asset security system is weak |
| Complaints | ◄ Number of complaints received from external parties is high |
| Conduct | |
| Governance and Management Matters | ◄ Board of directors emphasizes unduly on meeting earning projections |
| ◄ Board of directors and management take undue risks | |
| ◄ Board, managers, or members of staff have insufficient levels of income to meet personal debts or financial losses | |
| ◄ Board, managers, or members of staff appear to be living beyond their means | |
| ◄ Board, managers, or members of staff change lifestyles suddenly | |
| ◄ Board, managers, or members of staff display marked personality changes or intense family pressure | |
| ◄ Board, managers, or members of staff have a feeling of unfair treatment | |
| ◄ Board, managers, or members of staff display extreme greed for personal gain | |
| ◄ Board members and managers incur significant increase of expenses | |
| ◄ Board of directors and/ or management provide unsatisfactory answers to the supervisor’s or auditor’s questions | |
| ◄ Directors and/ or management have a poor reputation in the business community | |
| ◄ Board of directors and/ or management display overly aggressive attitude toward financial reporting | |
| ◄ Board of directors and/ or management place undue pressure on the auditors | |
| ◄ Board of directors and/ or management do not comply with laws and regulations | |
| ◄ Board of directors and/ or management display dominant management style, discouraging critical or challenging views from others such as members of staff | |
| Working Environment | ◄ Morale is low within the insurer or within certain departments of the insurer |
| ◄ Relationships at work are inappropriate or acting of individuals is unusual | |
| ◄ Earning ability is lower than that of other comparable insurers | |
| ◄ Company faces adverse legal conditions | |
| ◄ Managers or members of staff work late, are reluctant to take vacations and display signs of stress | |
| Operational Management | ◄ Staff recruiting processes contain problems |
| ◄ Management fails to follow proper policies and procedures in making accounting estimates | |
| ◄ Processing of payments is done at odd times (e.g., late in the day, after business hours, etc.) | |
| ◄ Insiders reduce holdings of insurer’s stock | |