Question

According to the 2016 COSO Fraud Risk Management Guide, what methods can an organization employ to detect fraud?

Answer 1

ANS: According to the 2016 COSO Fraud Risk Management Guide Following are the methods can be employed by an organisation to detect fraud;

Principle 1 - Fraud Risk Governance:

Board and Senior Management support fraud risk governance and establishes a comprehensive fraud risk management policy.

Establishes fraud governance roles and responsibilities throughout the organization and documents the fraud risk management program.

Communicates fraud risk management at all organization level.

Principle 2 – Fraud Risk Assessment:

Involves the appropriate level of management .

Analyzes internal and external factors and Considers various types of fraud .

Identifies existing fraud control activities and assesses their effectiveness

Determines how to respond to risks

Uses data analytics techniques for fraud risk assessment and fraud risk responses

Performs periodic risk assessments and assess changes to fraud risk

Principle 3 – Fraud Control Activities

Apply fraud preventive and detective control activities and Considers organization-specific factors and relevant business processes.

Utilizes a combination of fraud control activities and uses proactive data analytics procedures.

Principle 4 - Fraud Investigation and Corrective Action:

Establishes fraud investigation and response protocols

Conducts investigations and Communicates investigation results and takes corrective action and evaluates investigation performance

Principle 5 - Fraud Risk Management Monitoring Activities:

Considers a mix of ongoing and separate evaluations

Considers factors for setting the scope and frequency of evaluations and establishes appropriate measurement criteria

Considers known fraud schemes and new fraud cases and evaluate, communicates and remediates deficiencies