Management Antifraud Programs and Controls
MANAGEMENT
ANTIFRAUD
PROGRAMS AND CONTROLS
Guidance to Help Prevent and Deter Fraud
PREFACE
Some organizations have significantly lower levels of misappropriation of assets and are less susceptible to fraudulent financial reporting than other organizations because these organizations take proactive steps to prevent or deter fraud. It is only those organizations that seriously consider fraud risks and take proactive steps to create the right kind of climate to reduce its occurrence that have success in preventing fraud. This document identifies the key participants in this antifraud effort, including the board of directors, management, internal and independent auditors, and certified fraud examiners.
Management may develop and implement some of these programs and controls in response to specific identified risks of material misstatement of financial statements due to fraud. In other cases, these programs and controls may be a part of the entity’s enterprise-wide risk management activities.
Management is responsible for designing and implementing systems and procedures for the prevention and detection of fraud and, along with the board of directors, for ensuring a culture and environment that promotes honesty and ethical behavior. However, because of the characteristics of fraud, a material misstatement of financial statements due to fraud may occur notwithstanding the presence of programs and controls such as those described in this document.
4
INTRODUCTION............................................................................................................. 5
CREATING A CULTURE OF HONESTY AND HIGH ETHICS.............................. 6
Setting the Tone at the Top .......................................................................................... 6
Creating a Positive Workplace Environment............................................................. 7
Hiring and Promoting Appropriate Employees
ANTIFRAUD
PROGRAMS AND CONTROLS
Guidance to Help Prevent and Deter Fraud
PREFACE
Some organizations have significantly lower levels of misappropriation of assets and are less susceptible to fraudulent financial reporting than other organizations because these organizations take proactive steps to prevent or deter fraud. It is only those organizations that seriously consider fraud risks and take proactive steps to create the right kind of climate to reduce its occurrence that have success in preventing fraud. This document identifies the key participants in this antifraud effort, including the board of directors, management, internal and independent auditors, and certified fraud examiners.
Management may develop and implement some of these programs and controls in response to specific identified risks of material misstatement of financial statements due to fraud. In other cases, these programs and controls may be a part of the entity’s enterprise-wide risk management activities.
Management is responsible for designing and implementing systems and procedures for the prevention and detection of fraud and, along with the board of directors, for ensuring a culture and environment that promotes honesty and ethical behavior. However, because of the characteristics of fraud, a material misstatement of financial statements due to fraud may occur notwithstanding the presence of programs and controls such as those described in this document.
4
INTRODUCTION............................................................................................................. 5
CREATING A CULTURE OF HONESTY AND HIGH ETHICS.............................. 6
Setting the Tone at the Top .......................................................................................... 6
Creating a Positive Workplace Environment............................................................. 7
Hiring and Promoting Appropriate Employees