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1. Fraud risk asessment (rev).pptx
1. Kelompok 2
1. Mohammad Andi Purwanto
2. Dea Anas Stasya Insani
3. Hoirus Sholihin
4. Agus Sari
2. Cressey’s Fraud Triangle teaches
Pressure, Opportunity, and
rationalitation
The vulnerability that an
organization faces from individuals
capable of combining all three of
these elements is fraud risk
3. The nature of the business in which it
is engaged
The environment in which it operates
The effectiveness of its internal
controls
The ethics and values of the company
and its employees
4. Fraud risk assessment is a process aimed at
proactively identifying and addressing an
organization’s vulnerabilities to both
internal and external fraud.
A fraud risk assessment starts with an
identification and prioritization of fraud
risks that exist in the business.
5. In the simplest terms, the objective of a fraud
risk assessment is to help an organization
recognize what makes it most vulnerable to
fraud.
Why Should Organizations Conduct Fraud Risk
Assessments?
Improve communication and awareness about
fraud.
Identify where the company is most vulnerable to
fraud and what activities put it at thegreatest risk.
Know who puts the organization at the greatest
risk..
6. A good fraud risk assessment is one that fits within the
culture of the organization, is sponsored and supported by
the right people, encourages everyone to openly participate,
and is generally embraced throughout the business as an
important and valuable process
Engendered Trust
Determine the Best Techniques to Use in Conducting the
Fraud Risk Assessment
Interviews
POPULATION OF FRAUD RISKS?
FRAUDULENT FINANCIAL REPORTING
CORRUPTION
7. Employee Assessment
The employee assessment questions are
designed to assess the probability of a
fraudulent event occurring within the
organization
8. FRAUD RISK MANAGEMENT
What Is Risk Management?
Risk management involves the
identification, prioritization, treatment,
and monitoring of risks that threaten an
organization’s ability to provide value to
its stakeholders, whether increasing
profitability and shareholder value for a
for-profit entity or achieving program
specific goals for a nonprofit or
governmental agency.
9. The Current State of Risk
Management Initiatives
Organizations face an increasing volume and complexity of
risks, with 63 percent of survey respondents admitting that they
were caught off guard by an operational surprise in the last five
years.
Almost one-quarter of the organizations surveyed had no
enterprise-wide risk management processes in place even
though 55 percent of the organizations described their risk
culture as “strongly risk averse” or “risk averse.”
At 70 percent of the organizations surveyed, the board of
directors is asking for increased senior involvement in risk
oversight.
In addition to requests from the board of directors, the three
most frequently cited factors for increasing senior management
involvement in risk oversight are (1) regulator demands, (2)
emerging corporate governance requirements, (3) and a desire
to better anticipate unexpected risk events.
10. The Current State of Risk
Management Initiatives
While the number of organizations embracing ERM is on the rise,
the level of risk management initiatives is still immature based
on responses from surveyors, with only 25 percent describing
their organization’s risk management maturity as “robust” or
“mature.”
Only 32 percent of respondents indicated that an individual had
been formally assigned to serve as the Chief Risk Officer (CRO)
or an equivalent designation.
While 36 percent of respondents indicated that their risk
inventories are maintained at the enterprise level, more than 68
percent of the organizations did not have defined guidelines or
measures on how to assess the probability and impact of risks.
42 percent of respondents stated that their organizations either
had no structured process for identifying and reporting risk
exposures to the board or track risks by silos with minimal
reporting of aggregate risk exposures to the board.
11. The Current State of Risk
Management Initiatives
One of the more notable areas needing improvement in risk
oversight is the integration of risk management with strategic
planning; 35 percent of organizations do not conduct any formal
risk assessments of emerging strategic, market, or industry
risks.
Barriers to progress still exist that restrict the effectiveness of a
risk management process, with the most common being the
belief that “risks are monitored in other ways besides ERM.”
12. Risk Management
Frameworks
COSO Enterprise Risk Management—Integrated Framework
The eight components of the ERM Framework are:
1) Internal environment
2) Objective setting
3) Event identification
4) Risk assessment
5) Risk response
6) Control activities
7) Information and communication
8) Monitoring
14. Who Is Responsible for Managing
Fraud Risk?
Depending on the size and structure of the
organization, the following individuals and
groups may have key roles in ensuring effective
fraud risk management:
1) Executive management
2) The audit committee
3) The investigations group
4) The compliance function
5) The controller’s group
6) Internal audit
7) IT
8) Security
9) The legal department
15. The Objectives of a Fraud Risk
Management Program
The Objectives of a Fraud Risk Management Program
Fraud risk management programs must address
fraud before, during, and after it occurs.
Consequently, effective fraud risk management
programs must incorporate policies and procedures
designed to do all of the following:
a) Prevent fraud.
b) Detect fraud.
c) Respond to identified fraud.
16. Fraud Risk Management Program Components
According to Managing the Business Risk of Fraud,
the following ten components are important to
effectively manage fraud risk:
1) Statement of commitment
2) Fraud awareness
3) Affirmation process
4) Conflict disclosure
5) Fraud risk assessment
6) Reporting procedures and whistleblower
protection
7) Investigation process
8) Corrective action
9) Process evaluation and improvement (quality
assurance)
10) Continuous monitoring