Fraud Deterrence, Detection, and Prevention.docx

2016 they also should provide the necessary resources

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(Albrecht et al., 2016) . They also should provide the necessary resources and support for fraud prevention programs[Tys14]. Middle Management Similar to senior leadership, middle management should lead by example and model ethical behavior. If employees see supervisors bypass internal controls such as approving transactions without proper documentation or segregation of duties this will set a tone of unethical behavior that may lead to fraud. Middle management must ensure there are no overriding of controls. Equally important, they must monitor employees for behaviors that may create opportunity for fraud[Tys14]. Corporate Legal Team Sarbanes-Oxley (SOX) and the Securities and Exchange (SEC) require corporate legal teams to report material violations to the senior management. If the senior management does not respond appropriately, they must take their concerns to the audit committee. Also, the legal team is to ensure the organization is in compliance of all the SOX regulations and work with the audit committee. Moreover, the legal team should make sure that whistleblowers are protected and there are strong internal reporting systems in place[Mel12]. Internal Audit Internal auditors are required to have specific competencies and skills to evaluate their risk of fraud but they do not have the expertise to detect and investigate fraud[Pat14]. The role of internal audit is to ensure the organization has the controls and antifraud programs in place. The
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FRAUD DETERRENCE, DETECTION, AND PREVENTION 4 internal auditor serves as the “eyes and ears of the audit committee and top management” (Control Solutions International, n.d., p. 3). Audit Committee The audit committee plays a pivotal role in prevention and deterrence of fraud. The committee is responsible for investigating fraud and taking necessary action. It is the committee’s role to challenge management and safeguard that antifraud processes are in place. If fraud is detected, the committee reports their findings to the board of directors and retain legal counsel if needed [Fra05]. Other roles of the audit committee are to keep investigations confidential, monitor and assess risks of management overrides of internal controls, and establishing anonymous and confidential reporting for complaints [Tys14]. Corporate Security Corporate security should organize and prioritize all fraud prevention activities within the organization. This role includes the investigation of a fraud assertion by interviewing and document examination[Tys14]. Often corporate security is also responsible for IT security and may hold the title of Chief Security Officer (CSO). A piece of their responsibilities is for the safe keeping of information assets and lead the operational activities for risk management[Jos18].
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