Managing Fraud Risk

The United States Government Accountability Office has recently released a very informative and useful report establishing a framework for managing fraud risk.

Without seeking to sound critical there is not much in the GAO report that it is new.  

The value in the report is that it is the GAO that is the author.

As the report notes:

To help managers combat fraud and preserve integrity in government agencies and programs, GAO identified leading practices for managing fraud risks and organized them into a conceptual framework called the Fraud Risk Management Framework (the Framework). The Framework encompasses control activities to prevent, detect, and respond to fraud, with an emphasis on prevention, as well as structures and environmental factors that influence or help managers achieve their objective to mitigate fraud risks. In addition, the Framework highlights the importance of monitoring and incorporating feedback.

The framework is visualised as follows:

Screenshot 2015-09-24 21.48.37

The adoption of this framework or a variation thereof should be compulsory for any organisation that professes to have a zero tolerance to misadventure.

Diligent Audit Committees should be asking of their Management and auditors to cross reference the Framework against the organisational practice and to explain the discrepancies that may exist.

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