kuala lumpur, 3 4 may 2010 - iaaia one/5. maderasa hj. siri (15.45-16.15).pdf · mazen al-olofi....
TRANSCRIPT
KUALA LUMPUR, 3‐4 MAY 2010
Airline Fraud Risk Indicators Workshop
1. The Fraud Risk indicators Workshop Introduction
Table of Content
2. The Workshop Deliverables
3. Implementation at MH
4. Key Challenges
Fraud Risk indicators Workshop ‐ Introduction
1. To form a common understanding among the members on the main sources of fraud threats in the industry.
2. To develop a Fraud Risk Dashboard which reflects the key fraud risks in airline and their indicators.
3. To promote knowledge sharing for the progress of internal auditing in airline industry.
WORKSHOP OBJECTIVES
THE WORKSHOP FRAMEWORK
Any action, which deprives a carrier of the revenue to which it is entitled, undertaken without the carrier's knowledge or consent
What is Airline Fraud
The cost of fraud to the industry is estimated to be in the region of 1.5 billion USD every year.
What is The Significance
Warning signs and fraud alerts indicate that something is not quite right and increase thelikelihood that the fraud will be discovered
What are the Indicators to detect fraud
1. Understanding the Common Key Fraud Risks in the industry
2. Relate the experiences of member airlines that have already tracked the fraud indicators
3. Recognize the urgency to improve detective controls
4. Identify the spectrum of challenges that may be faced.
Programme Takeaways
Strengthen the Detective Controls!
ANDREW JONATHAN [email protected]
ETIHAD AIRWAYS
CHARLES [email protected] ATLAS AIR
DONALD A.E. [email protected] HAWAIIAN AIR
PAULINE [email protected] ROYAL BRUNEI
SUREN [email protected]
SRI LANKANAIRLINES
MARK [email protected]
BRITISH AIRWAYS
MANJEET [email protected] QANTAS
BELAL [email protected]
ROYAL JORDANIAN
IWONA WCISLO'[email protected]'
LOT POLISHAIRLINES
MADERASA HJ [email protected]
MALAYSIA AIRLINES
SARIZAL [email protected]
MALAYSIA AIRLINES
LIST OF PARTICIPANTS
RONALD [email protected] KENYAN AIRWAYS
VINCENT [email protected] JETAIRWAYS
ATIF [email protected] EMIRATES
LOUIS DE [email protected] KLM
VIJAY [email protected] AIR MAURITIUS
MAZEN AL-OLOFImazen.auditor@felixairways FELIX AIRWAYS
HUBERT [email protected] AIR MADAGASCAR
SALMAN HASSAN [email protected] GULF AIR
HANNA [email protected] FINNAIR
LEE CHIN [email protected]
MALAYSIA AIRLINES
SAMSU SURYATI [email protected]
MALAYSIA AIRLINES
Attended by 22 Participants From 19 Airlines
PROGRAM DELIVERABLES
No. Fraud Risk Definition Indicator(s) Source of Information
FRAUD RISK REGISTER• Fraud Description• Fraud Indicators
The Workshop Deliverables
PRE WORKSHOP SURVEY KEY RESULT
2 most common fraud risks encountered by all respondents are Credit Card Fraud and Tariff Abuse
92% respondents highlighted difficulty in tracking the fraud in excess baggage weight such as excess baggage payment intentionally not accounted for.
85% of the respondents face exposure in refund fraud. There is no indicator identified as it relies on built in system control.
More than 50% of the respondents have no Fraud Risk Management in place in their organisation to address fraud.
77% of the respondents highlighted the fraud exposure in procurement of aircraft parts. 80% of them do not have the indicator to monitor the fraud.
The Extent of Fraud
WORKSHOP DELIBERATION – The Key Fraud Risks 1. Abuse of Procurement Process
2. Excess Baggage / Ancillary Revenue Fraud
3. Theft includes In‐Flight, Baggage, Third party
4. Third Party/ Supplier Fraud – billing, pricing, service level
5. Cargo – false documentation in Weight / Description
6. Lost baggage – fake claims by passenger
7. Seat allocation ‐ Unauthorised upgrades
8. Misuse of system access – internal and external (hacking)
9. Misappropriation of company assets which include disposal process
10. Payroll manipulation
WORKSHOP DELIBERATION – The Key Fraud Risks 11. Financial statement / reporting fraud / false disclosures
12.Revenue loss through abuse of position
13.Unauthorised use of credit cards (1st and 3rd party)
14. Frequent flyer programme abuse
15. Inventory / booking class manipulation
16.Agents making fictitious bookings (GDS)
17. Tariff / rate abuse (Cargo)
18.Abuse of travel benefits
19.Abuse of medical leave / unauthorised absence
20.Obtaining and retaining employment through deceptions
21. Employee expenses (falsification of claims)
Implementation At MH
Establish and implement integrated
programs to instill understanding and awareness among the employees on
integrity
Identify gaps in practices, system,
policies and procedures and provide practical
mitigations to fraud risk
Implement mechanism to assure
conformance to regulation,
professional standards, policies,
procedures and work processes.
Provide evaluation,
monitoring and reporting system to ensure efficacy of integrity initiatives
Establish and implement
mechanism to give recognition on commitment to
integrity and impose penalty on activities that taint
company’s integrity.
Education Prevention Assurance Enhancement Reward & Penalty
Integrity Awareness
Senior Management Retreat Program
Induction Program
Management Development Program
Leadership Development Program
Ethics Policy Statement
Anti Fraud Policy Statement
Staff Rotation Program
Fraud Risk Management
Monitoring Adherence to Control
Hot Spot & Weak Spot Assessment
Periodic Screening Test
Whistle Blower Program
Internal Control Incident Report
Reward & Penalty
Review of Disciplinary Procedures
Integrity Recognition Initiatives
Integrity Message from Chief MH
Review of Audit Report
Fraud Risk Dashboard
MALAYSIA AIRLINES 3‐YEARS INTEGRITY PLAN
Malaysia Airlines Fraud Risks Indicator Dashboard
Fraud Risk Indicators – Refund Violation
Fraud Risk Indicators– Fraudulent Use of Credit Card
Fraud Risk Indicators– Significant Write Off/ Credit Note
Fraud Risk Indicators– Baggage & Cargo Theft
Fraud Risk Indicators– Creations of Fictitious Ticket
Fraud Risk Indicators– Unauthorized Access to Key Application System
Key Success Factor..Continuous Monitoring & Auditing
1. The fraud risk exposure are identified based on the hot spot and weak spot assessment on the process.
2. The fraud risk indicators are developed as warning signs and fraud alerts to indicate that something is not quite right and increase the likelihood that the fraud will be discovered.
3. The Fraud Risk Dashboard will facilitate a systematic and proactive way of monitoring the exposure and detecting the incidents.
4. Hence, the fraud risks are better addressed and managed via the continuous monitoring by the Management and continuous auditing by the Internal Audit.
Key Challenges
Key Challenges
1. Identifying the right indicator of a fraud risk
2. Obtaining Data From Business Units
3. Getting accurate and complete data in the absence of automated data extraction & analysis tool in Internal Audit
4. Negative Perception/ Lack of Understanding by Users
Thank you