RESPONSIBILITES OF

FRAUD PREVENTION
AND DETECTION
➢ Board of director
• To oversee and monitor management’s actions to manage fraud.
• To implement anti-fraud measures.
➢ Audit committee-IIA Standard 2060
• To evaluate management’s identification of fraud risk
• To provide recommendation on internal control
➢ Management
• Assesses the vulnerability of the entity to any fraudulent activities
• Responsible for establishing and maintaining an effective internal control system at a reasonable cost
➢ External auditor
• Have the responsibility to comply with professional standards and to plan and perform audit for an
organization’s financial statements to obtain reasonable assurance whether the statement are free from
misstatement.
• Whenever external auditors have determined that there is evidence of fraud, their professional standards
typically require that the matter be brought to the attention of the appropriate level of management.
➢ Internal auditor
• In deterring fraud by examining and evaluating the adequacy and effectiveness of IA
• Effective fraud prevention measures by knowing the organization’s strengths & weaknesses & providing
consulting expertise.
• Internal auditors’ role in relation to fraud risk management are as follows:-
❖ To obtain sufficient skills and competencies, including knowledge of fraud schemes, investigation
technique and laws.
❖ To conduct proactive auditing to search for misappropriation of assets and information
misrepresentation using CAAT technique and data mining.
➢ Fraud investigators
• Usually responsible for the detection and investigation of fraud as well as the recovery of assets.
• Also have a role in fraud prevention.
• Often work closely with the legal counsel to take action against perpetrators.
➢ Other employees
• Employees are the eyes and ears of an organization, and they should be empowered to maintain a
workplace of integrity.
• Employees can report their suspicion of fraud to the hotline, the internal audit department or a member of
the management.
FRAUD PEVENTION AND
DETECTION
 FRAUD PREVENTION
• Entails implementation of policies and procedures, employee training and management communication to educate
employees on fraudulent activities.
• The Committee of Sponsoring Organization of the Treadway Commission (COSO) presented of framework for assessing
and improving the internal control to fight fraud, such as :-
➢ Control environment
▪ A code of conduct, ethics policy or fraud policy to set the appropriate tone at the top.
▪ Ethics and whistle-blower programs to report fraud.
➢ Risk assessment
▪ Establishing a fraud risk assessment process that considers fraud risk factors and fraud schemes by
involving appropriate personnel in the process.
➢ Control activities
▪ Policies and procedure for business processes, including appropriate authority limits and segregation of
duties.
➢ Information and communication
▪ Designing and delivering fraud awareness training.
➢ Monitaring
▪ Using technology to aid in continuous monitoring and detection activities.
 FRAUD DETERENCE
• Training is usually a key factor in deterring fraud. Training can cover the organization’s
expectations of its employees’ conduct, the procedures and standards necessary to implement
internal controls and employee roles and responsibilities to report misconduct.

FRAUD DETECTION
➢ Detective control are designed to provide warnings or evidence that fraud is occurring or has occurred.
➢ Fraud detection method must be flexible, adaptable and continuously changing to meet the changes in
the risk environment.
➢ There are many ways to collect the information on fraud include:-
▪ Code of conduct information
▪ Whistle-blower hotline
▪ Exit interviews
▪ Proactive employee survey.