Fraud risk assessment checklist
Use this checklist to monitor the effectiveness of anti-fraud processes controls in place, and if the culture of honesty and ethics are being practiced by employees. the end goal of performing this assessment is to create a positive workplace environment free from fraudulent acts or any form of misconduct.
What does this form include?
This form contains 13 sections:
Setting the Tone at the Top:
Culture of Honesty and Ethics
- Is there a written Code of Conduct?
- Is the Code of Conduct disseminated to all employees at time of hire?
- Is there at least annual refresher training on the code of conduct for every employee?
- Is there a method of determining that employees understand the contents of the code of conduct?
- Do employees have a communication avenue for asking questions when ethical situations arise?
- Is there a Confidential Reporting Mechanism for employees to use to report suspected or possible fraud without fear of reprisal?
- Is the Confidential Reporting Mechanism contact widely advertised so that all employees are aware of it?
- Is there a protocol for handling all Confidential Reporting Mechanism activity?
- Is activity of the Confidential Reporting Mechanism reported to executive management and the board?
Creating a Positive Workplace Environment:
Hiring and Promoting Appropriate Employees:
Training:
Notification and Confirmation:
Discipline:
Implementing and Monitoring Appropriate Internal Controls:
Antifraud Processes and Controls
- Is risk assessment performed by each division, location, or segment separately?
- Are possible misconduct schemes, fraud scenarios, fraud categories, and applicable business activity or process identified?
- Were consequences posed by each scheme and were management’s tolerance for risks considered? (e.g Reputation damage, Financial damage - Monetary loss; Legal damage – Criminal or civil sanctions)
- Were they documented?
- Were red flags of fraud considered in the evaluation? Personal characteristics or situational
- pressures that can lead to fraud; Agency opportunities that can lead to fraud; Opportunities that allow or encourage management fraud
- Was the likelihood that each particular fraud will occur evaluated? Remote; Reasonably possible; Probable
- Were direct or indirect controls applicable to above-documented scenarios identified? Basic controls include: Segregation of duties relating to authorization, custody of assets, and recording and reporting of transactions; Supervisory reviews, verifications,
- reconciliation; Automated edit checks and system controls; Physical and logical security of assets; Embedded audit checks; Fraud detection software
Commission or Board of Directors:
Appropriate Oversight Process
- Is there a communication mechanism by which executive management and the board is made aware of antifraud programs, controls, and results?
- Are they advised of the potential fraud risks in the agency?
- Are they made aware of the elements of the agency’s antifraud programs and controls?
- Are they advised of all actual frauds and the actions taken to mitigate future similar frauds?
- Are they advised of activity to the Confidential Reporting Mechanism?
Management:
Full Name and Signature of Inspector
Use this template