Fraud Risk Assessment Overview
Fraud risk assessments are a type of enterprise risk assessment that focuses on the identification of fraud risk items and related mitigation strategies. Examples of typical fraud opportunities being analyzed during an assessment are shown in the "Fraud Opportunities" table below.
Fraud Risk Assessments
Suneras fraud risk assessments not only examine existing controls, but also focus specifically on control measures aimed at detecting and/or preventing fraud. Our assessments examine whether or not controls can be evaded and consider the vulnerability of controls to management override.
Our fraud risk assessments concentrate on fraud related activities that can:
- have a significant impact on the companys brand or reputation,
- expose the organization to civil and/or criminal liability, or
- result in financial losses for the business.
Fraud Opportunities
| Types of Fraud | Characteristics of Fraud Opportunities within Business Processes | Examples of Processes or Process Elements |
| Financial Fraud | Assets include cash, negotiable securities Processes include movement or exchange of the financial assets Processes include subjective valuations of assets or credit |
Cashiering/receipting Wire transfers Purchasing Credit/loan approval Auctions/asset disposal Appraisals |
| Theft of Assets | Assets can be converted easily to personal use or have dual use Assets have more than nominal value Access to the assets is open, frequent and with minimum control Assets are easily concealed Assets are commodities that are difficult to trace Assets are easily sold (ready market) |
Attractive assets such as portable computers Precious metal scrap Microchip inventories Consumer inventories Tools and equipment Gasoline Building materials Salvage/scrap/recyclables |
| Theft of Services | Services can be converted easily to personal use or have dual use Services have more than nominal value Access to the services is open, frequent and with minimum control Services are performed off premises Employees are also customers |
Telecommunications Building trades Consumer services Shipping Off-site warehousing and refurbishment/repair Adjusting A/R |
| Misrepresentations | Self-reporting processes Processes with high degree of subjective judgment Processes with high impact on organizational survival |
Consulting/legal services Estimating reserves Safety/environmental impact Legal/regulatory compliance |
The impact of each fraud opportunity occurring is further considered based on its relevance to the business, risk mitigation strategy and the overall culture of the organization.
To any one person, the likelihood of committing fraud is influenced by the following three elements:
- Attitude: A predisposition to commit fraud or an ability to rationalize fraudulent behavior.
- Pressure: Internal and external forces working on the individual that might influence their decision to commit fraud.
- Opportunity: Conditions that allow the fraud to take place.
