Fraud Risk Management
Fraud Risk Management: providing insight into fraud prevention, detection and response The Association of Certified Fraud Examiners (ACFE) states that fraud can “encompass any crime for gain that uses deception as its principal modus operandus”. Regardless of the size and complexity, all organizations are subject to fraud risks while only relatively few major frauds are picked up by the media, huge sums are lost by all kinds of businesses as a result of the high number of smaller frauds that are committed. Latest surveys show that organizations are losing an estimated 5% of their annual revenues to fraud. Therefore, organizations should increase their focus on fraud risk and take the opportunity to consider, enact and improve measures to detect, deter and prevent fraud. To do so, it is a pre-requisite for organizations to have a strong anti-fraud stance and proactive, comprehensive approach to combating fraud.
Roles and responsibilities of stakeholders in managing fraud Risks
The division of responsibilities for fraud risk management will vary between organizations, depending on size, industry, culture and other factors. The following are some of the stake holder which can be adapted to suit specific circumstances.Management’s fraud-related responsibilities
The legal foundation for management’s fraud-related responsibilities Management’s responsibility for internal controls Management’s responsibility for an effective corporate compliance and ethics program Document retention policiesAuditors’ fraud-related responsibilities
External audit standards related to fraud Internal auditor’s fraud-related responsibilities International standards for government auditingFraud-related responsibilities of other stakeholders: -
Human resources Chief financial officer Legal advisers Information system /information technology staff Anti-fraud officer Public relations Police External consultants InsurersFraud Investigation and Corrective Action
Organization’s objectives with respect to dealing with fraud Why conduct a fraud investigation? What Fraud Examination Entails Managing the Investigation