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Focus on Fraud & Forensics: The Fraud Risk Management Guide

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Organizations are continually faced with how to best address the risk of fraud. This challenge sometimes comes with uncertainties on what steps should be taken to assess the risk of fraud and what internal controls would be helpful to reduce the risk of fraud. Performing a Fraud Risk Assessment is a key step in evaluating the potential for fraud.
December 8, 2016

Organizations are continually faced with how to best address the risk of fraud. This challenge sometimes comes with uncertainties on what steps should be taken to assess the risk of fraud and what internal controls would be helpful to reduce the risk. Performing a Fraud Risk Assessment is a key step in evaluating the potential for fraud.

The Association of Fraud Examiners (ACFE) and the Committee of Sponsoring Organizations of the Treadway Commission (COSO) have partnered to produce the Fraud Risk Management Guide (FRMG).

The COSO framework calls for organizations to consider the “potential for fraud in assessing risks to the achievement of objectives.” The FRMG serves as guidance for organizations when assessing fraud risk and establishing an overall Fraud Risk Management Program. According to the FRMG, an on-going comprehensive approach to fraud risk management consists of the following:

  • Establishing fraud risk governance policies
  • Performing a fraud risk assessment
  • Designing and deploying fraud preventative and detective controls
  • Establishing a coordinated approach to conducting investigations and implementing corrective action
  • Monitoring and evaluating the total fraud risk management program

Although it is impossible for an organization to eliminate 100% of fraud from occurring, there are steps which can be taken to help prevent and detect frauds from impacting your organization. By striving for a strong system of internal controls, fraud risks can be minimized. COSO’s integrated framework and the new FRMG provide guidance to help assist with the design, implementation and monitoring such a system.

Below are a few additional resources from ACFE’s and COSO's website:

For more information about increasing awareness and reducing the risk of fraud, visit FraudWeek.com.

 

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