In New Zealand, boards of directors have a responsibility to oversee the governance of their organisations, including the prevention and detection of financial fraud. The Companies Act 1993 imposes a duty on directors to act in good faith and in the best interests of the company, which includes ensuring that appropriate systems and controls are in place to manage risk and prevent fraud.
In addition, the Financial Markets Conduct Act 2013 requires licensed financial service providers, including some organisations with boards of directors, to establish and maintain effective systems and controls to detect and prevent financial misconduct. Failure to meet these obligations can result in significant penalties, including fines, imprisonment, and disqualification from serving as a director.
Boards of directors can take several steps to fulfil their obligations concerning fraud governance, including appointing an independent audit committee, establishing a code of conduct for employees, conducting regular risk assessments, and monitoring transactions for suspicious activity. By taking a proactive approach to fraud prevention, boards of directors can help protect their organisations and fulfil their legal obligations.