One of the main concerns in the economic-financial area has been the detection of corporate fraud. The victims of fraud are companies, their internal and external users. As a result of fraud, in addition to resource misappropriations and immediate economic losses, companies may face challenges that impact their long-term stability and competitiveness. Rebuilding reputation after a fraud can be a difficult and costly task. The discovery of fraud often triggers regulatory investigations and legal proceedings and can also shake investor confidence, leading to a devaluation of the company’s stock.
In the Brazilian context, the most frequent frauds are those involving conflicts of interest and asset theft. According to research, fraudsters typically act to meet corporate goals, cover up mistakes, or obtain personal gains. To minimize and avoid such cases, companies need to adopt internal controls to oversee and monitor critical activities. The risk matrix is a tool that facilitates visualization and defines which aspects are a priority and should be handled with greater attention.
Segregation of duties is often overlooked, but it is frequently linked to cases of fraud. It is important that organizations have operational, supervisory, and auditing functions distributed among different professionals. Companies need to analyze and establish the appropriate structure according to their complexity. It is essential for each company to study the best solutions and keep this issue under constant review to improve their internal controls and prevent deviations, such as fraud cases.
A Compliance Program aims to establish guidelines and objectives through internal mechanisms to prevent, detect, and correct fraud and irregularities, promoting a culture of ethics, protection of human rights, and social and environmental responsibility.
The main objectives of an Integrity Program include:
• Combating deviations;
• Mitigating socio-environmental risks;
• Fostering good organizational practices;
• Elevating the company’s compliance maturity level by adapting its programs to the size and specifics of its operations, paying attention to specific risks; and
• Continuous monitoring.
Evaluation parameters include the commitment of senior management, codes of ethics and conduct policies, whistleblower mechanisms, internal controls and audits, training, and communication.
Companies should invest in robust compliance structures, while public agencies must ensure strict enforcement and application of penalties, promoting greater transparency and responsibility in contracting.
Grubbs Law has a team of specialized professionals with expertise in compliance, working on the implementation, management, and review of integrity programs for companies in various sectors of the economy, associations, cooperatives, and foundations in both the public and private sectors.
We assist our clients in meeting the specific needs of each project, identifying risks, conducting audits, developing policies, strengthening governance, and investigating fraud to ensure compliance with regulatory requirements.
By: Valéria Tavares | Compliance Officer Grubbs Law