Module 7 Discussion
1-Answer the initial question (About 250 words)
Review the two videos at the following site:
https://www.acfe.com/content.aspx?id=4294975038&terms=risk%20assessment
Discuss the implications for organizations and what questions they should be asking regarding the fraud risk assessment.
2-Reply to 2 student posts by commenting about their posts and building on the subject
(About 100 words each)
APA reference.
Student posts: See page 2 (one per page so you can answer following)
1-Felicia Smith posted Apr 16, 2019 12:23 PM
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Fraud risk assessment is “a process aimed at proactively identifying and addressing an organization’s vulnerabilities to both internal and external fraud” (Wells, 2014, Pg. 369). The purpose behind fraud risk assessments is for organizations to determine what the weaknesses are and how to fix or prevent them, regarding fraud risk. Analyzing the fraud risks associated with a business can mean some intense research both inside and outside of the company, “knowing your enemy means recognizing the threats of fraud that are relevant to your organization…it’s important not only to identify the risks that are relevant specifically to your internal business environments, but also potential threats that can come from outside your business” (Beauregard, 2009, Para. 4). Fraud risk is unavoidable and can occur in any business despite how protected a company may seem. The devastation that it can cause is untold, people could lose jobs, face criminal charges, and the business itself could close. Therefore, it is vital that each business continually initiates a fraud risk assessment in their business to determine if there are any discrepancies that need to be fixed.
I thought that the video was very helpful with explaining what types of things that businesses need to keep in mind while implementing a fraud risk assessment. For example, it is important to know the background of a company to determine what are the best ways to protect it. Additionally, I think that it is a great idea to trace a business process from start to finish to discover any anomalies or strengths that need to be fixed or that could be applied to another aspect of the business. Some questions that the company could be asking regarding fraud risk assessment include how do the employees perceive management to be, does management display an open and honest persona, does the company provide ample opportunities for people to discuss good and bad things about the business, does the company address problems appropriately, does the company have enough preventative measures in place to prevent fraud, what is the biggest risks of fraud in this company, and what can the company do to minimize fraud risk?
Beauregard, Olivier. (2009). Demystifying the Fraud Assessment Process.Fraud Magazine. Retrieved From:https://www.fraud-magazine.com/article.aspx?id=473
Wells, J.T. (2014).Principles of Fraud Examination. (4thed.). Hoboken, NJ. John Wiley & Sons, Inc.
2-Shirley Stenbak posted Apr 15, 2019 8:21 PM
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There are many factors that an organization should consider when they are assessing their fraud risk. According to the text, an organization should consider the nature of their business, the environment they operate in, their internal controls, and the overall culture of the organization. An organization like Wal-Mart needs to consider the retail environment and how fraud can be committed on every level. An organization like this needs to look at all the different methods of fraud like credit card fraud, inventory schemes, and payroll schemes to name a few (Wells, 2014).
Organizations need to perform fraud risk assessment to ensure that they are preventing and mitigating the activities that put the organization at risk most. For an organization like Wal-Mart, this means assessing fraud at all levels. One specific area they focus on is their supply chain. Because they use suppliers around the globe, the organization has to mitigate and prevent fraud through the governance of each country they work with and activities in the industry. Inventory schemes would be a huge area of activity for the organization and by being aware of the schemes that could affect the supply chain, Walmart mitigates some of the risk associated with running an organization so inventory heavy. This organization has developed strong standards through internal programs and by developing relationships and training with their suppliers (Walmart, 2019).
Wells, J. T. (2014). Principles of Fraud Examination (4th ed.), Hoboken, NJ: John Wiley & Sons, Inc. ISBN: 9781118922347
Walmart. (2019). Managing Risk in Our Supply Chain. Walmart.com. Retrieved from https://corporate.walmart.com/sourcing/managingrisk