When To Conduct a Fraud Risk Assessment

There are a number of reasons why a company may choose to conduct a fraud risk assessment.  Here are a few reasons why your company or not-for-profit organization would hire an experienced forensic accountant to conduct a fraud risk assessment:

To Establish a Fraud Monitoring Program.  A fraud risk assessment can be an effective first step in the design and implementation of any fraud risk management program, such as integrity monitoring oversight.  For example, a fraud risk assessment will identify inherent areas of fraud risk; assess the likelihood that a given fraud scheme could be accomplished; and identify improvements to internal controls.

To Establish an Ethical Culture.  A fraud risk assessment can be used to establish a company-wide culture that promotes best practices in fraud prevention and detection.  For example, a fraud risk assessment can create an environment for employees to speak to management and coworkers about the detection of possible wrongdoings without the threat of punishment or repercussions.  It can also foster better channels of communication and workflow among employees.

To Identify Areas for Further Investigation.  When investigating a suspected fraud, a fraud risk assessment of the areas or departments impacted by the fraud can be a used to identify the fraud schemes most likely to be accomplished in those areas or departments within the company.  An experienced forensic accountant can then tailor the scope of the investigation based on the previously identified fraud schemes and the current control environment in the relevant areas or departments.

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