For many years there has been continuing “ideal storm” in the Russian economy featured by high variation in oil prices and the exchange-value of ruble, deterioration in banking sector reliability, and extension of grey economy. In this context the behavior of employees and contractors has become increasingly unpredictable and motivated by searching for short-term gains rather than mutually beneficial and transparent cooperation in the long run. The rise in the corporate fraud is one of such negative trends.

Furthermore, it helps to remember that the most severe consequence of fraud in industry will be reduction of investment attractiveness.

I. Forensic Diagnostics in the Manufacturing zone

Stockpiling of uncounted finished products and excessive raw materials, intermediate products and other materials (spare parts, assembly components, fuel and lubricants) through:
  • manipulations with operating standards and wastage and rejection rates;
  • misrepresentation of instrument data and/or intentional damage of monitoring and measuring devices including video surveillance devices;
  • misrepresentation of inventory control data and/or production records data;
  • insufficient specification/lack of specification in the documents confirming the write-off of raw materials, intermediate and/or flaw products;
  • intentional errors in planning.

II. Forensic Diagnostics in the Procurement zone

Biased selection of suppliers while discriminating against the interests of the owner, in particular, through making contracts with companies affiliated with the responsible executives and through various tender manipulations:
  • procurement of products and raw materials that do not meet the quality standards established either by owner or by law;
  • overpriced purchases;
  • fictitious, double and/or excessive purchases.
  • Conferring advantages discriminating against the owner’s interests, to suppliers and contractors:
  • unfounded prepayment of contractors’ supplies/operations/services, even in case of non-fulfilment of required conditions;
  • intended prepayment of supplies/operations/services for the following acknowledgement of creditor indebtedness uncollectable.

III. Forensic Diagnostics in the Sales zone

  • intended (unreasonable) discounts and bonuses, granted to purchasers and customers, that are inconsistent inter alia with accepted practice of low-margin products sales or high season sales and/or systematically contradict with corresponding contractual conditions;
  • intended delay in payment granted to purchasers and customers;
  • unfounded write-off of bad debts of purchasers and customers, including their fraudulent/premeditated bankruptcy.

IV. Forensic Diagnostics in the Personnel and Non-production Expenses zone

  • unfounded bonus and premium payments, in particular, through distorting actual key performance indicators (KPI);
  • salary payments to ghost employees;
  • intentional overstatement of installation and construction expenses and/or repair expenses;
  • investment activities that intentionally discriminate against the owner’s interests, including lending and securities trading;
  • conclusion of leasing contracts, sponsorship and charity agreements, property and employee insurance contracts, under terms discriminating against the owner’s interests in the presence of more profitable market contracts or agreements.

V. Compliance Services and Fraud and Corruption Risk Management Services

Compliance services in accordance with the requirements of Russian and international anti-corruption laws:
  • analysis and assessment of corruption/bribery risks according to Russian and international anti-corruption laws (FCPA, UKBA);
  • development of recommendations for the improvement of the corruption/bribery risk management system;
  • assistance to the implementation of the anti-corruption compliance system;
  • provision of comprehensive range of independent, anonymous and confidential hot line services;
  • assistance in checking anonymous reports on violation of the anti-corruption laws.
Compliance services in the context of fraud and regulatory risk management:
  • assessment of fraud risks with the following development of recommendations for the improvement and facilitation of the internal control system;
  • assistance in the development and implementation of the HACCP principles for food facilities in compliance with the requirements of the Technical Regulations of the Customs Union ТРТС 021/2011.

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