This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here: http://flevy.com/browse/business-document/fraud-and-corruption-risk-assessment-methodology-391 As publicly known the risk of fraud and corruption is increasing globally and dealing a fatal blow to effort make to come out of the global economic crises. The fundamental game changer is the ability of organizations as key players in the economic well being of nations to adopt plan to deal with the fraud and corruption risk challenge. In response to this need, this Document provides an overview guide of why and what need to incorporated in fraud and corruption management strategy. Introduction part provides definition of fraud, the impact and impacted organization based on the Association of Certified Fraud Examiner 2012 report. The objective of the fraud and corruption strategy is provided indicating the cope as the prevention, deterrence, detection and response parameters. The slide that follows lists components of fraud and corruption Management strategy. Afterward, Fraud Risk assessment and Fraud investigation Methodologies is given to help deal managers have a tool to use in real life situation. It the hope that the user of this document will be appraisal on how they can execute their mandate of repositioning fraud and corruption risk level in their entities Additionally links publically available video (at YouTube) has been provided to provide further insight to the impact of fraud risk exposure. The author further aims to help the users know the right approach in managing fraud and corruption risk while also creating the very much need resilience and commitment to ethical way of running business. The author also provided a more detailed MSword document to help the user of power-point get more insight in issues of fraud management strategy.

1. Protecting the Entity
Designing an Agile Fraud & Corruption Risk
Management Strategy (AFCRMS)
We are with you in this work . Working Men must form a party of their own, take charge of the
government, dispose gilded fraud and put honest power in power- Denis Kearney
You must be the change you wish to see in the world-Mahatma Gandhi
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2. Table of Contents
1.
Introduction
2.
Definitions
3.
The Cost of Fraud & Corruption
4.
Fraud Victim Organizations
5.
Classifications of Fraud & Corruption
6.
Objective of Anti-Fraud & Corruption Strategy
7.
Components of the Strategy
8.
Fraud Risk Assessment Methodology (FRAM
9.
Fraud Investigation Methodology
10. Over-view of Fraud & Corruption Health Check
11. Sources of Fraud Risk-Sample
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3

3. Definitions
What is fraud?
Fraud -Fraud is any intentional act or omission designed
to Deceive others, resulting in the victim suffering a loss
and/or the perpetrator achieving a gain.
Managing the Business Risk of Fraud: A Practical Guide, prepared by
IIA, AICPA, and ACFE
What is Corruption?
Corruption is the abuse of public or private office for personal
gain. It includes acts of bribery, embezzlement, nepotism or
state capture. It is often associated with and reinforced by
other illegal practices, such as bid rigging, fraud or money
laundering
OECD
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4. Fraud Victim Organizations
Source –ACFE 2012 Report
Organization Type of Victim — Frequency
Management has primary responsibility for establishing and monitoring all aspects of the
entity’s fraud risk-assessment and prevention, detection, deterring and response activities.
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5. Source –ACFE 2012 Report
Classifications of Fraud & Corruption
Occupational Fraud and Abuse Classification System
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6. Components of the Strategy
Explicit Plan for
Prevention
Deterrence
 Detection
Risk Assessment
 Risk Control
Prevention
Policies and
Procedures
Physical and IT
Security
Employee Vetting
Risk Management
Training & Tone at top
Training (Technical
& General
Anti Fraud Training
Response Investigation
/Resolution
Mgt Commitment
Response
Investigation
Improved Controls
Disciplinary Action
Civil Recovery
Criminal
Prosecution
oversight function
 The creation open
and transparent
culture led from the
top.
Policies, practices,
procedures, reports
and other mechanisms
to monitor activities
and safeguard assets,.
Communication
channels providing
management right
information.
Enhance
accountability
stewardship and
support an adequate
internal environment
within their
organizations.
Healthy
Anti-Fraud
Organisation
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7. Fraud Investigation Methodology
Precise planning/Meticulous
organization
Painstaking Evidence
Sourcing &
data analysis
Thorough interviews/Coverts
Investigative activity evidence
Analysis, documentation and
Reporting
3/12/2009
(c) OCEG
 Planning and Preparation
Determine required personnel
and resources
Information Gathering and
Preserving
Document and Evidence
Gathering
Document and Evidence
Preservation and Retention
Interviewing & Discovery
Requesting and examining other
parties’‎information
Preparation of report and exhibits
Fact finding
Reports Preparation and
presentation
Experts/Non‐expert testimony
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8. Sources of Fraud Risk-Sample
Challenges to
Integrity
(Rationalization)
Under performing
Business
(Pressure)
Poor Risk Management
Excessive Goals
Management Ego
or Incentives
Personal problem
Pear pressure for wealth
Economic
Recession
Dominant/Abusive
Managers
Undesirable Products
Design Failure or
Competitor Innovation
Market
Transformation
Excessive Cost Base
Legacy Resources
Cause
Embezzlement or
Ego Spending
Dominant Managers
Override Controls
Inefficiencies
Psychopathic Personality
Accounting Staff timidity
Fraud Risks
Employees
Disempowered
Unintegrated
Information Systems
No Ethics Leadership
by Senior Management
No Ethics/Anti-Fraud
or Compliance Program
Large Executive
Incentives
Ineffective/Restricted Scope
Internal Auditing
Insufficient
Pressure to Improve
Poor Control (Opportunities)
Fraud Happen when Opportunity, Inceptive and Rationalization exist “ The Fraud Theory/Fraud Triangle
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