FRAUD: Risk Check-Up for Your Business

October 23, 2018 – Just like going to the doctor to ensure good physical health, a business should also go through a periodic checkup for fraud prevention. The Association for Certified Fraud Examiners estimates that organizations lose 5% of annual revenues due to fraud. Every business should be proactive in protecting their assets and businesses. We recommend a periodic review of your business to identify fraud risks and to identify preventative measures to put in place to control those risks. Here are some of the key concepts to consider:

Second Set of Eyes

Often times people that work day to day in a business may not notice something that is right in front of them. A fresh perspective from someone outside the organization can help identify risks and process weaknesses that were previously overlooked.

Cost vs. Benefit

Adding controls to a process to reduce fraud risk may not make economic sense. It is important to consider the estimated cost of a control with the fraud risk you are managing.

Manual vs. Automated

Manual processes are susceptible to human error and potential manipulation. Consider using automated controls from your systems to strengthen process controls to reduce fraud risk. However, automated controls do not mean “auto-pilot”. You still need to consider what review or system controls might need to be implemented to verify that the automated controls are working properly. Often times, automated controls can be more efficient and cost effective.

Changes in the Business

How does a company react to change? Change can be good for a business, but are controls compromised? Businesses constantly change. This includes the technology utilized and the personnel employed. As a result, new risks are continuously emerging. It’s important to periodically have a “check-up” for your business to ensure your “treatment plan” is effectively managing your risks.

This post is an excerpt from the Dopkins Risk Advisory Services newsletter. To read the complete publication, please click here.  

For more information, please contact Jim Krupinski at jkrupinski@dopkins.com.

About the Author

James A. Krupinski CPA

Jim has 25 years of experience providing audit and consulting services to clients from a diverse range of industries. In addition to his many audit management responsibilities, he currently serves as the leader of the Firm's risk management services group. He has assisted his clients with performing risk assessments, evaluating and improving internal controls, developing fraud prevention programs and complying with the requirements of Sarbanes Oxley's assessment of internal controls over financial reporting requirements.