Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance, 2nd Edition

CHAPTER 5

Internal Controls and Antifraud Programs

EXECUTIVE SUMMARY

The best way to ensure a culture of compliance is through an appropriately designed internal control and antifraud program. The American Institute of Certified Public Accountants’ Management Antifraud Programs and Controls is an exceptional 14-step program that any organization can implement to detect and prevent fraud. The steps include creating a culture of honesty and high ethics, evaluating antifraud processes and controls, and developing an appropriate oversight process. A key component of any program is a proper code of conduct or ethics policy that can help set a tone of honesty and integrity in an organization. The code must be well communicated to all employees. Before fraud risks can be mitigated, the risks must be identified and properly quantified as to their likelihood and potential financial impact. These two factors help determine the method of risk mitigation. There are several methods in use to conduct a risk assessment. Some methods for charting the likelihood and impact of fraud are more effective than others.

MANAGEMENT ANTIFRAUD PROGRAMS AND CONTROLS: THE 14-POINT PROGRAM

In 2002, the Fraud Task Force of the American Institute of Certified Public Accountants (AICPA) commissioned a study to provide guidance to help prevent and detect fraud. The AICPA, the Association of Certified Fraud Examiners, the Institute of Internal Auditors, and other professional organizations sponsored the study. ...