Many organizations have little knowledge as to their ability to prevent and detect fraud, simply because management has not made it a high enough priority to address or just don’t have the ways to detect it. Unfortunately, this approach can lead to the discovery of such vulnerabilities only after a fraud has been perpetrated and discovered, with the economic and reputational damage already inflicted.

One key element of an organization’s fraud mitigation program is a fraud risk assessment. A fraud risk assessment is a disciplined approach where members of the team (both internal and external) identify all known fraud risks by transaction type across the organization and related controls in place that might mitigate such risks. To the extent that controls might be in place, the team identifies controls to reduce the fraud risks.

Management then evaluates the costs of implementing the controls, in combination with the establishment of acceptable fraud risk tolerances (i.e., no system of internal control can ensure that fraud absolutely cannot be perpetrated) by area.

The next step is to prioritize corrective actions and then implement necessary changes to ensure that fraud risks have been reduced to a level that is tolerable to management.

Modernized Business Solutions can assist executive leadership in performing an organizational Fraud Risk Assessment. Our professionals have experience in industry and have also performed numerous fraud investigations, so they are aware of the types of fraud schemes that can be perpetrated and how they can be prevented.