acfe fraud prevention check-up - BKD

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ACFE FRAUD PREVENTIONCHECK-UPACFE FRAUD PREVENTION CHECK-UP——A process for promptly investigating (whereappropriate) and resolving expressionsof concern regarding known or potentialwrongdoing,then communicating the resolutionto those who expressed the concern.The organization should have a plan thatsets out what actions will be taken, and bywhom, to investigate and resolve differenttypes of concerns. Some issues will be bestaddressed by human resources personnel,some by general counsel, some by internalauditors and some may require investigationby fraud specialists. Having a prearrangedplan will greatly speed and ease theresponse and will ensure appropriate personsare notified where potentially significantissues are involved (e.g., legal counsel,board of directors, audit committee,independent auditors, regulators, etc.).——Monitoring of compliance with the code ofconduct and participation in related training.Monitoring may include requiring atleast annual confirmation of complianceand auditing of such confirmations to testtheir completeness and accuracy.——Regular measurement of the extent towhich the organization’s ethics/complianceand fraud prevention goals are beingachieved. Such measurement typically includessurveys of a statistically meaningfulsample of employees. Surveys of employees’attitudes towards the company’sethics/compliance activities and the extentto which employees believe managementacts in accordance with the code of conductprovide invaluable insight into howwell those components are functioning.——Incorporation of ethics/compliance andfraud prevention goals into the performancemeasures against which managersare evaluated and which are used to determineperformance-related compensation.ResultsScore from 0 (process not in place) to 30 points(process fully implemented, tested within the pastyear and working effectively).Score:ACFE.com (800) 245-3321 / +1 (512) 478-9000 10
ACFE FRAUD PREVENTIONCHECK-UPACFE FRAUD PREVENTION CHECK-UP7. Proactive fraud detection❑❑To what extent has the organization establisheda process to detect, investigateand resolve potentially significant fraud?Such a process should typically includeproactive fraud detection tests that arespecifically designed to detect the potentiallysignificant frauds identified in the organization’sfraud risk assessment. Othermeasures can include audit “hooks” embeddedin transaction processing systemsthat can flag suspicious transactionsfor investigation and/or approval prior tocompletion of processing. Leading-edgefraud detection methods include computerizedemail monitoring (where legallypermitted) to identify use of certain phrasesthat might indicate planned or ongoingwrongdoing.ResultsScore from 0 (process not in place) to 10 points(process fully implemented, tested within the pastyear and working effectively).ADD ALL SCORES FOR THE TOTAL SCORE(Out of a possible 100 points)Score:total Score:Interpreting the ScoreA brief fraud prevention check-up provides a broad idea of your organization’s performancewith respect to fraud prevention. The scoring necessarily involves broad judgments, whilemore extensive evaluations would have greater measurement data to draw upon. Theimportant information to take from the check-up is the identification of particular areas forimprovement in your company’s fraud prevention processes. The precise numerical scoreis less important and is only presented to help communicate an overall impression.The desirable score for an organization of any size is 100 points, since the recommended processesare scalable to the size of your organization. Most companies should expect to fall significantlyshort of 100 points in an initial fraud prevention check-up. That is not currently consideredto be a material weakness in internal controls that represents a reportable conditionunder securities regulations. However, significant gaps in fraud prevention measures shouldbe closed promptly in order to reduce fraud losses and reduce the risk of future disaster.ACFE.com (800) 245-3321 / +1 (512) 478-9000 11
Page 1 and 2: ACFE FRAUD PREVENTIONCHECK-UP
Page 3 and 4: ACFE FRAUD PREVENTIONCHECK-UPThe Be
Page 5 and 6: ACFE FRAUD PREVENTIONCHECK-UPACFE F
Page 7 and 8: ACFE FRAUD PREVENTIONCHECK-UPACFE F
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Page 13 and 14: Sponsored by:The Institute of Inter
Page 15 and 16: Team Members:Toby J.F. Bishop, CPA,
Page 17 and 18: Managing the Business Risk of Fraud
Page 19 and 20: establish their own fraud risk mana
Page 21 and 22: Fraud risk identification may inclu
Page 23 and 24: Thus, to properly address fraud ris
Page 25 and 26: The board also has the responsibili
Page 27 and 28: • Implementing adequate internal
Page 29 and 30: Fraud Risk Management Program Compo
Page 31 and 32: ecently been hired in the purchasin
Page 33 and 34: Organizations can identify and asse
Page 35 and 36: The Risk Assessment TeamA good risk
Page 37 and 38: This also involves understanding th
Page 39 and 40: - Invoices for goods not received o
Page 41 and 42: Other RisksRegulatory and Legal Mis
Page 43 and 44: SECTION 3: FRAUD PREVENTIONPrincipl
Page 45 and 46: An organization’s HR group is oft
Page 47 and 48: SECTION 4: FRAUD DETECTIONPrinciple
Page 49 and 50: Process ControlsProcess controls sp
Page 51 and 52: keep such information confidential.
Page 53 and 54: will vary depending on the nature,
Page 55 and 56: Conducting the InvestigationPlannin
Page 57 and 58: • Extended investigation — Cond
Page 59 and 60: Fraud ControlsDeloitte Forensic Cen
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APPENDIX B: SAMPLE FRAMEWORK FOR A
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APPENDIX C: SAMPLE FRAUD POLICY 41N
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CONFIDENTIALITYThe ______________ U
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Sample Fraud Policy Decision Matrix
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Identified Fraud Risksand Schemes (
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2) Misappropriation of:a) Tangible
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) Embezzlement(1) False accounting
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Fraud Prevention Area, Factor, or C
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O-Organization / PersonnelO1-Leader
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O4.3 Enhance Operational Skills & C
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PR-Prevent, Protect & PreparePR1-Ge
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E-Periodic EvaluationE1-Evaluation
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I2-CommunicationI2.1 Develop Commun
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CriminologyFraud Prevention Program
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Sample Fraud PolicyAssociation of C
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Sample Fraud PolicyCONFIDENTIALITYT
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Sample Fraud PolicyFraud Policy Dec
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Fraud’s Worst Enemyhttp://www.fra
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ACFE Insights - ACFE Insightshttp:/
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ACFE Insights - ACFE Insightshttp:/
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