Page 12 - CIMA SCS Workbook November 2018 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

Unusual behaviour

Warning signs of fraud can often come from the most unexpected places. Sometimes
characteristics of dedicated workers can also be signs of something out of the ordinary taking
place. Again focussing on similarities with the situation in Cronislavia, if any of our sales
representatives were working particularly long hours, never taking any time off even when they
were ill or never taking any holiday, then these could all be signs that they have something to
hide. If any of our sales representatives have unusually high sales and are getting significantly
higher bonuses than their peers it could be excellent work, but it should also be sense checked in
case those sales are being made using dishonest means.

Whistleblowers

The unusual activity could be spotted by anyone within our organisation; it doesn’t have to be a
manager, or an internal auditor. This is where a whistleblower comes in, as with all forms of risk
management within any organisation including Novak it is all employees’ responsibility to be
aware and report anything unusual through appropriate channels. For example, if another sales
representative thought that one of their colleagues was behaving inappropriately they should feel
they can raise it so that it could be reviewed to make sure that they were complying with Novak’s
policies and procedures.

Organisational indicators

If a department within Novak was under-resourced this could lead to fraud occurring, perhaps
through over-worked managers unable to provide the supervision required. This could manifest
itself in one of our factories where workers may be able to steal small amounts of drugs to sell
personally for their own profit. Or it could be that a member of staff feels aggrieved at being over-
worked and starts to look for ways of compensating themselves for the extra hours they are
putting in; again this could manifest itself through theft and resale of drugs. It often starts as small
amounts and builds up.

Luck

Often it is pure luck that leads to suspicious behaviour being spotted. It may be that a sales
representative that is offering financial incentives to doctors to buy extra Novak drugs and they
are carefully covering up what is happening, but due to unforeseen circumstances are forced to
take time off and while someone else is covering their sales meetings they discover that normal
protocol is not happening and an investigation follows.

Fraud prevention

In terms of how Novak could attempt to prevent fraud, a key aspect will be the basic culture
within our organisation. I mentioned before that I would hope that most of the employees within
our organisation will be proud to work for Novak and keen to help Novak achieve the mission and
corporate values we clearly set out.

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