Fraud Prevention, Detection, and Response
Michael A. Crain DBA, CPA/ABV, ASA, CFA, CFE, William S. Hopwood, Carl Pacini, George R. Young · 2017
This chapter explains how to understand how fraud risks are managed within the organization and the fraud risk assessment process. The audit committee must be proactive in overseeing fraud risk management. It must have a good, open dialog with the external auditor, especially with respect to fraud issues and risks. It should also have good, open lines of communication with legal counsel with whom it should consult when fraud is suspected. Given a strong governance structure, the focus should be on effective processes for fraud risk assessment, which, in turn, must be followed by a focus on fraud prevention, fraud detection, and fraud investigation. Fraud risk assessment must be considered within the larger context of enterprise risk management. Many organizations use a formal, standards-based information security management system (ISMS) as a key element in managing fraud risks. Such a system focuses on protecting information confidentiality, integrity, and availability (CIA).