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FRAUD RISK ASSESSMENTS

An effective fraud risk identification process includes an assessment of the incentives, pressures, and opportunities to commit fraud. Employee incentive programs and the metrics on which they are based can provide a map to where fraud is most likely to occur.

 

riskanalysis

A fraud risk assessment is different to an audit in that it is a detailed and focused examination to identify any opportunities available to an employee to commit fraud. Our approach has been developed to fill the gap left by internal and external Auditors who are primarily looking at controls.

 

At TaylorHay we look at how a fraud may occur, what could contribute to it and how to remedy the situation. A TaylorHay fraud risk assessment not only examines existing controls, but also focuses specifically on control measures aimed at detecting and/or preventing fraud. Our assessments examine whether or not controls can be evaded and consider the vulnerability of controls to management override.

 

It is a powerful assessment that identifies exactly where the fraud risks within your organisation are.

 

Our fraud risk assessments concentrate on fraud related activities that can:

    • Have a significant impact on the company’s brand or reputation
    • Expose the organization to civil and/or criminal liability
    • Result in financial losses for the business

 

    • Examples of typical fraud opportunities analysed during a TaylorHay risk assessment are illustrated in the following table:

 

FRAUD OPPORTUNITIES

TYPES OF FRAUD CHARACTERISTICS OF FRAUD OPPORTUNITIES WITHIN BUSINESS PROCESSES EXAMPLES OF PROCESSES OR PROCESS ELEMENTS
Financial Fraud
  • Assets include cash and negotiable securities
  • Processes include movement or exchange of a financial assets
  • Processes include subjective valuations of assets or credit
  • Cashiering/receipting
  • Electronic Fund Transfers (EFT)
  • Purchasing
  • Credit/loan approval
  • Asset disposal
Theft of Assets
  • Assets that can be converted easily to personal use or have dual use
  • Assets that have more than nominal value
  • Access to the assets is open, frequent, and with minimum control
  • Assets that are easily concealed
  • Assets that are commodities that are difficult to trace
  • Assets that can be easily sold
  • Portable computers
  • Scape metal
  • Consumer inventories
  • Tools and equipment
  • Petrol
  • Building materials
  • Salvage/scrap/recycles
Theft of Services
  • Services that can be converted easily to personal use or have dual use
  • Services that have more than nominal value
  • Access to the services is open, frequent, and with minimum control
  • Services are performed “off premises”
  • Employees are also customers
  • Telecommunications
  • Building trades
  • Consumer services
  • Shipping
  • Off-site warehousing and refurbishing/repair
  • Adjusting A/R
Misrepresentations
  • Self-reporting processes
  • Processes that have a high degree of subjective judgment
  • Processes that have a high impact on organizational survival
  • Consulting/legal services
  • Estimating reserves
  • Safety/environmental impact
  • Legal/regulatory compliance

 

For further information relating to our specialist services please contact us or call on +617 5631 9862.