Corporate Fraud and Internal Control + Software Demo: A Framework for Prevention

APPENDIX D

Fraud Prevention Checklist

FOR THE PURPOSES OF THE EVALUATION of the organization’s current fraud position, this fraud prevention checklist is intended as an aid to determining the antifraud posture of the organization and its ability to withstand fraudulent attacks. It is suggested that this checklist be used as an aid by both internal audit and the audit committee.

1. Is ongoing antifraud training provided to all employees of the organization?

• Do employees understand what constitutes fraud?
• Have the costs of fraud to the company and everyone in it—including lost profits, adverse publicity, job loss, and decreased morale and productivity—been made clear to employees?
• Do employees know where to seek advice when faced with uncertain ethical decisions, and do they believe that they can speak freely?
• Has a policy of zero tolerance for fraud been communicated to employees through words and actions?

2. Is an effective fraud reporting mechanism in place?

• Have employees been taught how to communicate concerns about known or potential wrongdoing?
• Is there an anonymous reporting channel available to employees, such as a third-party hotline?
• Do employees trust that they can report suspicious activity anonymously and/or confidentially and without fear of reprisal?
• Has it been made clear to employees that reports of suspicious activity will be promptly and thoroughly evaluated?

3. To increase employees’ perception of detection, are the following proactive measures taken and ...