After reviewing the LaRosa case, it is important to infer how a situation like this could have been prevented or detected early on. In chapter three of Financial Services Anti-Fraud Risk and Control Workbook, it gives examples of preventative techniques. First, to understand the weakness within an organization it is important to look at the red flags; the red flags can help show the vulnerabilities that a company has via a fraud risk assessment. The textbook mentions standard preventative techniques beginning with Anti- Fraud Policies. Policies are important to implement because the mold the mind-set of the employees. The policies can be short and clear so that employees are aware of the zero tolerance and the actions the company takes towards
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For example, background checks and psychological questions can be implemented to find out certain behaviors and the interviewees past. Two additional techniques that coincide are to enforce a strict segregation of duties and clear-cut delegation of authority. For the segregation of duty, it separates jobs so that no one employee has a large amount of authority to commit fraud by themselves (Goldmann, 2010). Delegation of authority refers to having different levels of authority approve a portion of the approval process. Techniques include some form of due diligence to do some research, know customers, and to know the documents. Lastly, some techniques can take place after a loan is closed, such as a detailed post-closing quality control. For this, it is good to review the documents to make sure they are authentic and ask for reverifications of employment and sending confirmation letters to the address given to ensure the loan’s ownership (Goldmann, 2010). In addition, it is good to do internal monitoring and do research on loan portfolios. Some examples would be to look at loan demographics and background checks on the loan officers to see if any personal finances to see if there is a conflict of interest between officer and borrower (Goldmann,
For example, background checks and psychological questions can be implemented to find out certain behaviors and the interviewees past. Two additional techniques that coincide are to enforce a strict segregation of duties and clear-cut delegation of authority. For the segregation of duty, it separates jobs so that no one employee has a large amount of authority to commit fraud by themselves (Goldmann, 2010). Delegation of authority refers to having different levels of authority approve a portion of the approval process. Techniques include some form of due diligence to do some research, know customers, and to know the documents. Lastly, some techniques can take place after a loan is closed, such as a detailed post-closing quality control. For this, it is good to review the documents to make sure they are authentic and ask for reverifications of employment and sending confirmation letters to the address given to ensure the loan’s ownership (Goldmann, 2010). In addition, it is good to do internal monitoring and do research on loan portfolios. Some examples would be to look at loan demographics and background checks on the loan officers to see if any personal finances to see if there is a conflict of interest between officer and borrower (Goldmann,