Fraud prevails with all the levels in an organization. It is thus impossible to eradicate fraud from every levels or departments. But by implementation of an effective Fraud Risk Management Plan, detection and prevention of the prevailing fraudulent activities maximizes creating strong fraud deterrence effect in such organization.

Fraud Risk Management Plan is a comprehensive approach to manage fraud risk. This plan provides something more than that is required to perform a fraud risk assessment.

–          It involves guidance on establishing an overall Fraud Risk Management Programme specific to the working of an Organization;

–          It gives a broad platform to establish fraud risk governance policies, designing and developing fraud preventive and detective control activities;

–          It provides conduct of regular checks and investigations and monitoring and evaluating the total fraud risk prevailing in a Company;

–          It recommends ways in which governing boards, senior management, staff at all levels, internal auditors can deter fraud in their organization.

Objective of the Plan

  • To prevent the fraud to happen before the fraud actually takes place.
  • To detect the causes of the fraud and implement and improve better internal policies.
  • To perform comprehensive fraud risk management assessment to identify specific fraud scheme and risks and assess their livelihood and significance.
  • To evaluate existing fraud control activities and implement actions to mitigate residual fraud risk.

Who is responsible for Fraud Risk Management?

  • The board of directors;
  • Top management;
  • Personnel at all levels of the Organization;
  • Every level of management and staff;
  • Internal auditors

What needs to be done?

  • To understand how the organization is responding to heightened risks and regulations, as well as public and stakeholder scrutiny;
  • What form of Fraud Risk Management Program the organization has in place, whether or not / how it identifies fraud risks;
  • What it is doing to better prevent fraud, or at least detect it sooner; and
  • What process is in place to investigate fraud and take corrective action.

Ways in which Organization can deter fraud –

  • By establishing a visible and rigorous fraud governance process.
  • By creating a transparent and sound anti-fraud culture

Impact of the plan –

The impact of the Plan is that it defines principles and points of focus for fraud risk management and describes how organizations of various sizes and types can establish their own Fraud Risk Management Programs. The plan includes examples of key program components and resources that organizations can use as a starting place to develop a Fraud Risk Management Program effectively and efficiently.

In addition, the plan should contain references to other sources of guidance to allow for tailoring a Fraud Risk Management Program to a particular industry or to government or not-for-profit organizations. Each organization needs to assess the degree of emphasis to place on fraud risk management based on its size and circumstances. It shall address fraud risk management roles and responsibilities, fraud risk management considerations for smaller organizations, data analytics employed as to be a part of fraud risk management.