Discussions on FRAUD should no longer be taboo!

Risk Advisory/Internal Audit

By James Yard


Companies must proactively address fraud risk in their organizations. Regulations such as the U.S. Federal Sentencing Guidelines, the U.S. Foreign Corrupt Practices Act, and the U.S. Sarbanes-Oxley Act all mandate corporate responsibility for awareness, risk assessment, and monitoring measures with regard to inappropriate behavior. Executive leadership, all levels of management, the board of directors, and the audit committee of companies are now more focused on their corporate governance programs. An organization cannot be proactive without anticipating, evaluating, and measuring its vulnerabilities and exposures. Unfortunately, until now, not much guidance was available and companies were not confident on how their practices compared to successful programs in the industry.

On July 8th, 2008 the Association of Certified Fraud Examiners (ACFE), the American Institute of Certified Public Accountants (AICPA), and The Institute of Internal Auditors (IIA), published new guidelines for establishing practical measures for addressing fraud risk, in organizations of any size. The guidance focuses on five key principles for establishing a framework for fraud risk management. In summary, these principles provide the foundation for developing a framework for fraud risk governance, risk assessment, prevention and detection, and reporting.

“Managing the Business Risk of Fraud: A Practical Guide” can be downloaded for free from the sponsoring organizations’ Web sites at www.acfe.org, www.aicpa.org, and theiia.org.

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