The identification of fraud risk is a process rather than an activity. To identify the risk of fraud, one must identify the weaknesses in any processes that link the customer’s payment to the bank account holdings of the company. Additionally, one must identify the internal controls processes as well as the individuals that are responsible to the company protect against fraud by monitoring the internal controls processes. The identification of risk parameters are intrinsically tied to the managerial accounting processes of the business and the checks and balances that exist to prevent fraudulent behavior.
The measures and procedures necessary to avoid and eliminate fraud is essentially tied to the implementation and monitorization of internal controls. Internal controls are the processes that establish the checks and balances to which all parts of the transation between the consumer/vendor and the business are tracked and accounted for until the bank transfer. All petty cash must also be tracked upon receipt to which the best method is to do cash drawer changes or install a camera if the operation is simple enough to check on whether there is any fraudulent behavior.
The general and specific questions I would ask with regard to detecting fraud risk are: 1.) What are your internal controls? 2.) Describe and assess your current fraud detection system 3.) Does this company have an internal controls officer? 4.) Who is your auditing firm and do they provide to this firm a risk assessment? 5.) In the history of the firm has there ever been a case of fraud being committed? These questions should be asked to the executive management preferably the CEO, CFO, CIO, and CTO.
The auditor’s responsibility is to check for discrepancies in the reporting of internal data to external sources. The intention of the audit is to verify financial reporting statements for truth and accuracy. The auditor inherently checks for fraud based on the job descripton of the auditing firm The auditing firm is an appropriate actor to identify fraud given the focus on accounting and financial reporting as well as the depth of time spent by accountants on reviewing balance sheets and income statements for correctness.
- Fraud Risk Management (2013) “Fraud Risk Management.” Retrieved from: Web. Retrieved on: 5 Nov. 2013. http://www.protiviti.com
- Ybarra & Green- (TESL/TEFL) (2013) “Using Technology to Help ESL/EFL Students Develop Language Skills.” Retrieved from: Web. 5 Retrieved on: Nov. 2013. http://iteslj.org/