Fraud Risk Program
Fraud is a common problem. As a result, stakeholders are paying increasing attention to this issue. It is important for organizations to protect themselves against fraud. Unfortunately, there is no one-size-fits-all solution for preventing and/or detecting fraud; fraud risk is influenced, for example, by the sector in which the organization operates, as well as by organizational culture and applicable laws and regulations. One of the tools an organization can use to gain more insight into potential fraud risks is the COSO framework developed by COSO and ACFE, as outlined in the “Fraud Risk Management Guide” (hereinafter: COSO Framework). This is a useful tool for directors and governance-responsible individuals to design and continuously assess their fraud risk program. PwC’s forensic department can assist you in shaping this program.
Why a Fraud Risk Program?
It goes without saying that organizations want nothing more than to prevent fraud, but the changing world means they are increasingly confronted with new fraud risks.
Framework for a Fraud Risk Program
Organizations often find it challenging to take the first step towards mapping out fraud risks. To systematically identify where potential gaps or fraud risks exist within the organization, the five components of the COSO Framework can be used:
Control Environment – The organization develops and communicates a fraud risk management program that reflects the expectations of directors and supervisors regarding fraud risk.
Risk Assessment – The organization performs a comprehensive fraud risk assessment to identify, evaluate, and mitigate specific fraud risks or schemes.
Control Activities – The organization selects, develops, and implements preventive and detective control measures.
Information and Communication – The organization establishes a communication process to receive information about suspicious fraud indications and undertakes a coordinated approach to investigate suspected fraud.
Monitoring – The organization continuously selects, develops, and evaluates to ensure all five components of the framework are present and functioning.
More information about the COSO Framework (including focus points and examples) is included in the following flyer.
Fraud Risk Assessment
By preparing a fraud risk assessment, you can identify and understand risks within operations and weaknesses in internal controls that pose a fraud risk, broken down by process. For the identified risks, a plan can be developed to mitigate them. The fraud risk assessment relates to the second and third components of the COSO model (risk assessment and control activities).
How Can We Help You?
We would be happy to discuss with you how to prevent and detect fraud within your organization in a timely manner. Below are some examples of support we can offer you:
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