Question

What new opportunities does integrating forensic accounting techniques with the internal control system have in providing an effective mechanism for developing a fraud risk management strategy? (300 words)

Answer 1

Corporate fraud risk management strategy has increasingly become a sustainable business development goal. Recent reforms in forensic accounting technology for corporate fraud risk management globally have opened up new avenues for corporate governance and internal control mechanism implementation.

Using an integrated methodology for forensic accounting implementation has implications for corporate decision-makers to effectively fulfil corporate governance quality assurance and anti-fraud through a forensic accounting strategy map illustration.

Addressing Fraud with a Strong Control Environment

In establishing a control environment, management must consider the potential for fraud in assessing risks to the achievement of an entity's objectives and be knowledgeable about the various ways that fraud can occur. As part of the process for identifying and analyzing fraud risks, management forms a basis for determining how such risks should be managed and establishes control and monitoring activities, formalized in policies and procedures, to help ensure that management directives to mitigate fraud risks to the achievement of objectives are communicated and carried out.

While no control activity can stop a person who is determined to commit a fraud from doing so, a strong control environment, combined with an understanding of the incentives to commit fraud, acts as a form of preventive control against fraud by making the potential perpetrator assess the high risk of getting caught. Conversely, a weak control environment provides opportunity to those thinking of committing a fraudulent act because the risk of getting caught is low.

Fraud accounting and investigating specific instances of fraud and by analyzing, and summarizing, it highlights areas with weak internal controls and to work on recommendations to remediate them and prevent future incidents.

A detailed review of internal controls, corporate governance policies and risk management techniques helps in assessing the exposure to fraud risks and accordingly help develop a Rsik management Policy to mitigate/remedy the same