Question

Amazon: Describe the fraud risks (Please be industry specific, you can find this out indirectly by reading more about the company

Answer 1

Fraud Risk :

It refers to risk of control failures , management override and deliberates act of ommission and commission that lead to financial losses. Fraud risk management is a proactive approach towards fraud and aims at preventing, controlling and detecting fraud early

Approach to avoid fraud risk from company point of view are ,

1) Continuos monitoring -Regular monitoring using new techonologies and inventions.Apply forensic data analytics of transactions regularly.

2) Enable Fraud Response Plan :Enable a better fraud response plan. Investigate cases of confirmed fraud

3) Identify weakness in anti-fraud controls -Evaluate the risk management framework of the companies, develope a better fraud risk profiles.

4) Reccomend antifraud controls in the company.

Common Fraud risk factors -

1) When the members of management have guaranteed company debt, there will be strong pressure to report certain financial results. If the employees or workers are not satisfied with the company they are more foced to do fraud.

2) Risk of fraud will reduce drastically if segregation of duties is enabled in the company. Lack of segregation of duties is one of the factors of fraud risk factor.

3) Improper documentation and unauthorised use of assets.

4) Lack of internal audit function.

5) When a person  is in a position to dominate the decisions of the management team or Board of directors.

6) If items that can be stolen are of high value in proportion to their size , it is less risky to remove them from the company. Proper arrangement is one of the factor of fraud risk factor.

All companies should develop a fraud risk assessment process to mitigate the risk of fraud. The success of your fraud management initiatives largely depends on your corporate culture , ethics etc