Effective Fraud Risk Management

By McNeal, Andi | Journal of Accountancy, June 2017 | Go to article overview

Effective Fraud Risk Management


McNeal, Andi, Journal of Accountancy


Late last year, the Committee of Sponsoring Organizations of the Treadway Commission (COSO), of which the AICPA is a member, and the Association of Certified Fraud Examiners (ACFE) jointly released a newly updated Fraud Risk Management Guide that provides organizations with practical guidance on designing, implementing, evaluating, and strengthening fraud risk management programs that align with the 2013 COSO Internal Control--Integrated Framework. How much do you know about the foundational principles of an effective fraud risk management program? Are you familiar with the specific mechanisms and approaches necessary to successfully manage your organization's or your clients' fraud risks? Take this quiz to see how your fraud risk management knowledge measures up.

1. Which of the following is NOT one of the five principles of fraud risk management?

a. Fraud deterrence.

b. Fraud risk governance.

c. Fraud investigation and corrective action.

d. Fraud risk assessment.

2. A comprehensive fraud risk management program involves integrating data analytics considerations and techniques into which of the following components?

a. Fraud risk assessment.

b. Fraud control activities.

c. Fraud risk management monitoring.

d. All of the above.

3. Which of the following groups has overall responsibility for the design and implementation of the fraud risk management program?

a. Risk and control personnel.

b. Internal audit.

c. Senior management.

d. The board of directors.

4. The fraud risk assessment should do all of the following EXCEPT:

a. Analyze both internal and external fraud risk factors.

b. Specifically consider the risk of management override of controls.

c. Determine the personnel or departments most likely to commit fraud.

d. Be conducted independent of organizational management.

5. Which of the following is FALSE regarding an organization's fraud control activities?

a. Control activities should involve a mix of preventive and detective controls.

b. Effective control activities can provide absolute assurance against fraud.

c. Preventive controls are typically more effective at lower organizational levels.

d. The organization should use fraud control activities to promote fraud deterrence.

ANSWERS

1. (a) While fraud deterrence is one of the primary objectives of a comprehensive fraud risk management program, it is not one of the five principles of fraud risk management provided in the Fraud Risk Management Guide. Those principles are:

* Fraud risk governance: The organization establishes and communicates a fraud risk management program that demonstrates the expectations of the board of directors and senior management and their commitment to high integrity and ethical values regarding managing fraud risk.

* Fraud risk assessment: The organization performs comprehensive fraud risk assessments to identify specific fraud schemes and risks, assess their likelihood and significance, evaluate existing fraud control activities, and implement actions to mitigate residual fraud risks.

* Fraud control activity: The organization selects, develops, and deploys preventive and detective fraud control activities to mitigate the risk of fraud events occurring or not being detected in a timely manner.

* Fraud investigation and corrective action: The organization establishes a communication process to obtain information about potential fraud and deploys a coordinated approach to investigation and corrective action to address fraud appropriately and in a timely manner.

* Fraud risk management monitoring activities: The organization selects, develops, and performs ongoing evaluations to ascertain whether each of the five principles of fraud risk management is present and functioning and communicates fraud risk management program deficiencies in a timely manner to parties responsible for taking corrective action, including senior management and the board of directors. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Effective Fraud Risk Management
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.