HERE IS WHAT WE DISCOVERED

The results of various other studies were used to identify factors which contributed towards the discovery of fraud. Respondents were asked to rank these factors according to their perceived order of influence. The following scale was used:

• 11 = most frequent reason for the discovery of fraud;

• 1 = least frequent reason for the discovery of fraud

The following factors were presented (abbreviation used in charts
in brackets):

• by accident (by accident);

• internal control system (i/control);

• internal auditor (i/auditor);

• notification by Police (Police);

• whistle blowing, employee tip-off (whistle blower);

• by fraud investigation, in house (in house invest.);

• by fraud investigation, consultant (consultant);

• by outside party, e.g. contractor, public (outsider);

• by external auditor, e.g. Auditor-General/RAA (AG Office);

• notice by other department of government agency (other gov agency);

• other (other).

Conclusions:

• The above information confirms the important role that whistle blowers play in assisting organisations with the discovery of fraud. The Protected Disclosures Act, No.26 of 2000 protects employees who make certain disclosures. As this Act promulgated in 2000 gains more public realization, it will further strengthening this source of fraud discovery.

• Chart 18.1 identifies internal control systems and internal audit as the two major tools to prevent and to fight fraud. Apart from whistle blowers (number one position) internal control and internal audit are also seen as the major tools in detecting fraud.

• Internal audit plays a far more important role in fraud detection compared to external audit. It is only in the provinces where the role of the external auditor (Office of the Auditor-General) competes well with the internal audit components.

• The gap between the fraud detection role of internal and external auditors is largest amongst local authorities and public entities. In both these groups we find a more active involvement of Registered Accountants and Auditors (private sector auditors), with numerous public entities having private sector audit firms as their auditors.

• The external auditor's role in the discovery of fraud is rated higher in the public sector compared to the external auditor's role in this regard in the private sector (public sector: position 7 out of a possible 11); (private sector position 8 out of a possible 9).

• Relatively large differences between the Offices of the Auditor-General in the various provinces are recorded. The Office with the largest impact is Limpopo and the lowest is the Western Cape Office of the Auditor-General.