17 June, 2010


Fraud risk assessment has been identified by; regulatory bodies, professionals, professional standard setters, law enforcement authorities, and auditors as the most powerful proactive tool that can assist businesses in fighting fraud and economic crisis. Fraud risk is the probability that fraud can occur in a system and still go undetected.

Fraud risk assessment plays crucial role in the development and maintenance of effective fraud management programs, controls and systems. Fraud has been identified as one of the principal causes of global economic meltdown.

Managers of business and the business community at large have called upon forensic accountants to device better means of protecting business assets and resources. Hence, the development of this wonderful tool called fraud risk assessment. Below are the roles of a forensic accountant in the process of assessing the level of business exposure to fraud risk

Fraud Risk Assessment: Building a Fraud Audit ProgramFraud Risk Assessment: Building a Fraud Audit ProgramL. W. Vona's Fraud Risk Assessment (Fraud Risk Assessment: Building a Fraud Audit Program (Hardcover))(2008)

Testing of internal controls: all my years of experience in the fraud fighting field has consistently proved to me that quality and implement-able internal controls are the key to successfully curbing of frauds and other financial misappropriations in any entity. It is the role of forensic accountant to test internal controls of organizations and help establish one where there is none. This is an important role in the risk assessment procedures.

Evaluation of recruitment procedures: poor recruitment procedures are the prime cause of fraud in an organization. A lot of employers of labour fail to adequately investigate the background of employees before engaging the service of the employee. It is the duty of forensic accountant to ensure that best practices in recruitment procedures are followed. Forensic accountants should also advise management on the best method of rotating employees.

Review of incident management process / business continuity plan: most frauds are hidden under the disguise of implementing change. A lot of frauds are perpetrated while pretending to implement change. It is the role of the forensic accountants to review change management procedures to ensure that frauds are not hidden while doing this.

Review of work ethics/ environment: workplace bullying is a fertile ground that breeds occupational fraud. Workers are likely to conceal fraud in a tensed atmosphere than they would do in a plain atmosphere. It is the duty of the forensic accountants as a fraud fighting professional to ensure that working environment is encouraging enough for fraud to be prevented, detected, and corrected. Work complaint documentation should be seriously reviewed for possible loopholes that are likely to lead to fraud.
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