Fraud risk assessments: An ounce of prevention could save your business
If left unchecked, fraud can devastate a business. Although many businesses believe they have adequate controls to minimize the risk of fraud, employee theft is still prevalent across all industries. As such, we cannot overstate just how important it is for a business to assess their level of exposure to fraudulent activities.
Fraud Risk Assessments Identify Opportunity for Potential Fraud
A fraud risk assessment from a forensic accountant identifies potential fraud risks/schemes by functional area (cash, inventory, accounts receivable and payable, cost of goods sold, payroll, revenue, etc.), and sets out:
- The likelihood of occurrence (low, medium, high);
- The significance if a fraud were to occur (low, medium, high);
- The internal control weakness and ways to improve the controls;
- The personnel who have opportunity to circumvent the controls;
- How the assets may be moved/taken by the employee; and
- How the actions could be concealed and converted.
A fraud risk assessment performed by a forensic accountant will identify vulnerabilities in your organization and point you in the right direction of how to improve controls in these specific weak areas. For example, installing proper surveillance cameras at loading docks or in areas where cash is handled, and more important, monitoring the activity and control, will minimize fraud risk,
Fraud Response Plans
Finally, you may wish to formulate a fraud response plan. This plan can greatly expedite the response time if fraud is detected and provide a road map for the steps to take when fraud is suspected. This will assist in addressing the fraud in an efficient and expeditious manner.
Whether you’re looking to protect your business from the dangers of potential fraudsters or formulating a fraud response plan for your corporation, the first step is to contact us for a consultation. Our fraud and forensic accounting experts have the depth of knowledge and experience required to assist in keeping your business as safe as possible from fraud.