Management accountants can play a key role in understanding and countering financial crime risk.
What can management accountants bring to the table when it comes to fighting financial crime? Clearly those in leadership positions will have a greater influence over policy and governance. However, management accountants at all levels and in all roles can have an important part to play in the fight against financial crime.
Often it is not the person with fraud in their job title who detects something is amiss; it is the person who spends every day looking at transactions, completes monthly accounts and recognises when something has changed or is out of the ordinary. Those in junior positions should not underestimate the impact that they can have. Finance professionals at all levels of the organisation can and should be part of the frontline defence against fraud and financial crime.
A management accountant should approach their role with an inquiring mindset. This means questioning when something feels wrong, asking the difficult questions and challenging when no adequate explanation is available. This might include:
Questioning a transaction which does not fit with the expected outgoings or incomings for a time period.
Ensuring all documents are in order before processing payments and challenging when something is amiss.
Asking for documented justification from the approver if asked to do something which seems out of the ordinary.
By approaching their work with a degree of scepticism and a desire to find the facts, management accountants can help defend their organisation against fraud. For example, questioning why payroll figures have changed could lead to uncovering employee-led fraud, or highlighting missing documentation before approving payment could reduce the risk of inflated payments to a fraudulent vendor. This approach is not always easy, especially when someone is relatively junior or new in a role. However, links to financial crime is a major risk and so raising concerns is in the best interests of the business. An organisation should have a clear method for reporting, including the option for doing so anonymously in order to allay fears about reporting.
Management accountants have key skills when it comes to understanding and communicating risk. Using data to bring risk to life is a key element of helping stakeholders understand financial crime – explaining to senior stakeholders the scale of potential losses to fraud and the need to invest in counter-measures requires someone who is financially literate and can also explain to non-experts. A formal training in finance and membership of the accounting profession means that your voice is trusted when it comes to money.
CIMA members and students are required to follow the CIMA Code of Ethics at all times in their professional lives. Their commitment to ethical behaviour and upholding the reputation of the management accounting profession sets CIMA members apart. Part of this is a commitment to act in the public interest, which when it comes to financial crime means detecting, responding and preventing it.
For junior members of staff, this might mean flagging concerns when something seems amiss in the accounts.
For more senior employees and finance leaders, this could mean ensuring that the organisation’s risk profile is understood and that a robust governance plan is in place.
