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APPENDIX H: OCEG FOUNDATION PRINCIPLES THAT RELATE TO FRAUDNOTE: This appendix is a sample from another entity. As such, no adjustment has been made to this material. Theinformation may or may not agree with all the concepts noted within this paper. The material is being provided as anexample that may be a used as a tool, reference, or starting point.Below is a summary listing of the practices in the Open Compliance and Ethics Group (OCEG) Foundation 44 and howeach practice serves the principles of establishing a strong fraud prevention program as advocated in this paper.C-CultureC1-Ethical CultureC1.1 Define Principles & Values that reflect a desire for high ethical standards and a no tolerance position towardfraud and corruption.C1.2 Enhance Ethical Climate & Mindsets as a deterrent to fraudulent and corrupt conduct.C1.3 Foster Ethical Leadership through rewards and acknowledgment as a model of appropriate conduct in the faceof stressors that would potentially lead to fraudulent or corrupt behaviors.C2-Risk CultureC2.1 Define Philosophy & Style that communicates and cascades through the organization a no tolerance positionon fraud risk and the existence of strong anti-fraud policies and controls.C2.2 Enhance Risk Management Climate & Mindsets so that the workforce in addition to the board and seniormanagement are attune to the stressors and circumstances that create fraud risk so it can be deterred and detectedpromptly.C3-Governance CultureC3.1 Define Governance Style & Approach to specify the desired level of board oversight and involvement in theanti-fraud program, including the thresholds that escalate incidents of fraud to higher levels of visibility, up to andincluding board attention.C3.2 Enhance Governance Climate & Mindsets to ensure that accountability for managing fraud risk ripplesup to the responsible board member or committee, regularly placing a discussion of the status of the fraud riskmanagement program on the agenda.C4-Workforce CultureC4.1 Understand Workforce Management Philosophy & Style to include the aspects of workforce management thateither contribute to or deter the risk of fraudulent or corrupt behaviors.C4.2 Enhance Commitment to the Workforce & Competency by structuring policies and practices in hiring, training,performance evaluation, promotion, compensation, rewards/discipline, career advancement and terminationor retirement to deter fraudulent and corrupt behavior, including practices that deal swiftly and decisively withincidents and protect whistleblowers from retribution.C4.3 Enhance Workforce Satisfaction & Commitment to eliminate or mitigate stressors that create fraud andcorruption risk.44© Open Compliance and Ethics Group (2003-2007). OCEG Foundation (Redbook), Phoenix, Ariz.: OCEG (available for free download atwww.oceg.org/view/foundation).69
O-Organization / PersonnelO1-Leadership & ChampionsO1.1 Define Leadership & Champion Responsibilities to include communicating how fraud risk managementprogram objectives facilitate organizational objectives, how individuals contribute to achieving program objectivesand why the program is and should be supported enterprise wide.O1.2 Screen & Select Program Leadership & Champions to assure that the leaders and champions are qualified toserve as advocates for anti-fraud messaging based upon prior upstanding conduct or remorseful transformationfrom prior fraudulent/corrupt or otherwise inappropriate conduct.O1.3 Enhance Champion Skills & Competencies to include a thorough understanding of fraud, stressors that triggerfraudulent conduct, and the scope, parameters and activities of the fraud risk management program.O2-Oversight PersonnelO2.1 Define Oversight Structure & Responsibilities to:• include in the appropriate charter documents whether the entire board, a board member, or a boardcommittee has been assigned oversight responsibilities for directing the activities of the fraud riskmanagement program,• evidence a commitment to a proactive approach to fraud risk management.• play an active role in the risk assessment process, and using internal audit, and external auditors, asmonitors of fraud risks.• appoint one executive-level member of management to be responsible for fraud risk management.• approve sufficient resources in the budget and long-range plans to enable the organization to achieve theseobjectives.• ensure that management designs effective fraud risk management policies to encourage ethical behaviorand to empower employees, customers, and vendors to insist those standards are met everyday.• model good board governance practices (like board independence, ) as a component of the fraud riskmanagement program.• require that the audit committee meet separately with the external audit firm and chief audit executive todiscuss the results of the anti-fraud program on the entity’s financial statements.• ensure the board is receiving accurate and timely information from management, employees, internal andexternal auditors, and other stakeholders regarding potential fraud occurrences.• assure protection of all requisite privileges and adherence to information management policy forcommunications related to fraud investigations and audit committee discussions.O2.2 Screen & Select Oversight Personnel to identify the board member(s) best suited based upon skills, experience,knowledge, and character (based in part upon the results of background checks) to provide anti-fraud programoversight.O2.3 Enhance Oversight Skills & Competencies so the board:• has a thorough understanding of what constitutes fraud and corruption risk.• sets the appropriate “tone at the top” in its own independent practices and through the CEO jobdescription, evaluation, and succession-planning processes.• maintains oversight of the fraud and corruption risk assessment.• evaluates management’s identification of fraud and corruption risks.70
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ACFE FRAUD PREVENTIONCHECK-UP
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ACFE FRAUD PREVENTIONCHECK-UPThe Be
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ACFE FRAUD PREVENTIONCHECK-UPACFE F
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Sponsored by:The Institute of Inter
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Team Members:Toby J.F. Bishop, CPA,
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Managing the Business Risk of Fraud
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establish their own fraud risk mana
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Fraud risk identification may inclu
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Thus, to properly address fraud ris
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The board also has the responsibili
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• Implementing adequate internal
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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
Page 61 and 62: APPENDIX B: SAMPLE FRAMEWORK FOR A
Page 63 and 64: APPENDIX C: SAMPLE FRAUD POLICY 41N
Page 65 and 66: CONFIDENTIALITYThe ______________ U
Page 67 and 68: Sample Fraud Policy Decision Matrix
Page 69 and 70: Identified Fraud Risksand Schemes (
Page 71 and 72: 2) Misappropriation of:a) Tangible
Page 73 and 74: ) Embezzlement(1) False accounting
Page 75 and 76: Fraud Prevention Area, Factor, or C
Page 81: Fraud Prevention Area, Factor, or C
Page 85 and 86: O4.3 Enhance Operational Skills & C
Page 87 and 88: PR-Prevent, Protect & PreparePR1-Ge
Page 89 and 90: E-Periodic EvaluationE1-Evaluation
Page 91 and 92: I2-CommunicationI2.1 Develop Commun
Page 93 and 94: CriminologyFraud Prevention Program
Page 117 and 118: Sample Fraud PolicyAssociation of C
Page 119 and 120: Sample Fraud PolicyCONFIDENTIALITYT
Page 121 and 122: Sample Fraud PolicyFraud Policy Dec
Page 123 and 124: Fraud’s Worst Enemyhttp://www.fra
Page 125 and 126: ACFE Insights - ACFE Insightshttp:/
Page 127: ACFE Insights - ACFE Insightshttp:/
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