Fraud risk management – an Internal Audit perspective

Internal Audit has a prime responsibility to review and monitor the efficacy of an organisation’s risk controls but the fraudster presents a distinct challenge through his deliberate attempts to circumvent the established checks and balances. John Webb CFE, Head of Internal Audit at Cazenove, considers how the internal auditor might approach fraud prevention and detection.

This article is based on an address which John Webb CFE gave to the Association of Certified Fraud Examiners’ 9th Annual European Conference in London in October 2004.

Risk model – the frame of reference

Best practice directs firms to adopt a comprehensive approach to risk management that covers all exposures, including fraud. Management, it says, should prepare the risk model, which, typically, will be facilitated by Risk Managers. Internal financial controls are then imposed to mitigate the fraud threats.