Corporate Fraud and Internal Control Workbook: A Framework for Prevention

Chapter Eight

Fraud Risk Management

WHEN PEOPLE INDULGE IN FRAUD, they do not do so in the expectation of being caught and punished. They commit fraud because they believe they can get away with it. To implement effective fraud risk management, risks need to be examined from the potential fraudster's perspective. Where conventional risk assessment methodologies start with inherent risk and move toward limiting those risks by the quality of the system of internal controls, fraud-related assessment looks at the controls from the perspective of how can they be bypassed, who can bypass them, whether it is known, by whom, and how.

QUESTIONS: FILL IN THE BLANKS

Refer to Chapter 8 in Corporate Fraud and Internal Control: A Framework for Prevention.

1. Fraud-related ___________ looks at the controls from the perspective of how can they be bypassed, who can bypass them, whether it would be known, by whom, and how.

2. Fraud-related assessment is a critical element in the governance of any organization. In a public company, it falls under the legal ___________ to shareholders.

3. ___________ is still classified as the risk before taking into consideration risk-reducing elements; however, the risk in this case is specifically that of fraud.

4. Grouping risks based on causation makes it possible to identify those control elements that, if properly designed and implemented, can be most effective ...