Cost-cutting measures that have arisen as a result of the global financial crisis, such as outsourcing, have served to increase the risk of fraud in the financial services sector, according to a national forensic partner with accounting firm KPMG.
“When you think about outsourcing you might think that you are outsourcing to an organisation in Australia, but do you know they are actually doing all of the processing and keeping your information in Australia?” KPMG partner Gary Gill said.
Specifically, many self-managed superannuation funds (SMSFs) are exposed to outsourcing of activities, particularly administrative processes, and Gill had the following advice for those trustees.
“When you are entering into the agreement with the outsourcing provider make sure it has a clause in the agreement to give you the right to request their auditors to go in there to have a look at the controls and get some assurance around those controls,” he said.
“Also, make sure the agreement gives you the right to send someone in there to give you a chance to look and ask them about their fraud controls and what they are doing to manage those risks.”
In relation to the greater superannuation industry Gill said the accessing of members’ funds and investment fraud remain the two biggest fraud risks.
He suggested anti-fraud guidelines issued by the Australian Prudential Regulation Authority could help against identity theft and said common sense was still one of the more effective tools against investment fraud.
“The old adage that ‘if it sounds too good to be true it probably is’ applies,” Gill said.
