Building Defenses Against Fraud in the Commodities Sector
With technology advances, reduced staffing, and increased market volatility, the opportunities for fraudulent events in the commodities industry are increasing, and their impact can be more damaging. Publicly traded companies in the United States are protected from fraud by statutes that require them to implement controls, but few regulations protect private companies from experiencing fraud, and controls at small public companies receive less scrutiny by external auditors. For these companies, controls are designed to assist a company in meeting its objectives, protecting its assets, and providing a framework for organizational governance. As such, they are good business practices and are implemented by companies that want to verify that processes are operating as designed and intended. This article offers an overview of fraud risks and the means of defense.