Leading professional associations: "Saying you 'don't want fraud' is not enough!" ALTAMONTE SPRINGS, Fla., July 8
ALTAMONTE SPRINGS, Fla., July 8 /PRNewswire/ -- New guidelines for
fighting fraud have been released jointly by three leading professional
organizations.
"Managing the Business Risk of Fraud: A Practical Guide" is sponsored by
the Association of Certified Fraud Examiners (ACFE), the American Institute of
Certified Public Accountants (AICPA), and The Institute of Internal Auditors
(IIA). Principles for establishing effective fraud risk management, regardless
of the type or size of an organization, are outlined in the guide.
"Regulations throughout the world assign the responsibility for preventing
fraud to management," said ACFE President James D. Ratley, CFE. "But beyond
regulatory requirements, organizations that value ethical behavior as a core
principle and actively manage their fraud risks ultimately will be more
competitive and earn and preserve a more positive corporate reputation."
The new guidance provides a practical approach for companies committed to
preserving stakeholder value. It can be used to assess or improve an
organization's fraud risk management program, or to develop an effective
program where none exists.
Five key principles within the guidance address governance, risk
assessment, fraud prevention and detection, investigation, and corrective
action. Following the guidance will help ensure that there is suitable
oversight of fraud risk management, that fraud exposures are identified and
evaluated, that appropriate processes and procedures are in place to manage
those exposures, and that fraud allegations are addressed in a timely manner.
"Many organizations need to do more to deter fraud," said AICPA President
and Chief Executive Officer Barry C. Melancon, CPA. "Preventing fraud requires
a dedicated commitment from management. This guide provides best practices,
tools, and examples that organizations can use to help manage their fraud
risks."
The guidance outlines the relationship between fraud prevention and
governance, pointing out that the board's role is critically important because
most major frauds have historically been perpetrated by senior management in
collusion with other employees. The guidance further explains that personnel
at all levels of an organization have responsibility for confronting fraud
risk. Those from the board room to the mailroom should understand how the
organization is responding to heightened regulations and public and
stakeholder scrutiny; what form of fraud risk management program is in place;
how fraud risks are identified; what is being done to prevent and detect
fraud, and what processes are in place to investigate fraud and take
corrective action.
"In many cases, boards of directors and management do not expect to have
fraud in their organizations -- and articulate that loudly," said IIA
President David A. Richards, CIA. "But just saying 'we don't want fraud' or
'we don't tolerate fraud' does not ensure that fraud will not occur.
Organizations must take a proactive stance to ensure that effective fraud
prevention and detection techniques are properly used in response to key
risks."
A team of more than 20 fraud management experts from the private and
public sectors, as well as academia, worked to compile the guidelines over a
two-year period. The guidance is endorsed by the Association of Chartered
Certified Accountants, the Canadian Institute of Chartered Accountants, the
Institute of Management Accountants, the Open Compliance & Ethics Group, the
Society of Corporate Compliance and Ethics, and The Value Alliance.
According to the ACFE's 2006 Report to the Nation on Occupational Fraud,
U.S. organizations lose an estimated 5 percent of their annual revenues due to
fraud. When applied to the estimated 2006 GDP, those losses added up to
approximately $653 billion. The report also concluded that organizations
without anti-fraud programs -- such as fraud hotlines, internal audit
departments, and anti-fraud training -- lost approximately twice the amount of
revenue to fraud when compared to organizations with anti-fraud programs. For
example, organizations without an anonymous fraud hotline suffered a median
annual loss of $200,000, whereas organizations with hotlines suffered a median
annual loss of only $100,000.
"Managing the Business Risk of Fraud: A Practical Guide" can be downloaded
for free from the sponsoring organizations' Web sites at http://www.acfe.org/,
http://www.aicpa.org/, and http://www.theiia.org/.
About The IIA: With members in 165 countries, The Institute of Internal
Auditors (IIA) is the internal audit profession's global voice,
standard-setter, and resource for professional development and certification.
About ACFE: The ACFE is the world's premier provider of anti-fraud
training and education. Together with nearly 45,000 members in more than 125
countries, the ACFE is reducing business fraud worldwide and providing the
training and resources to fight fraud more effectively. For more information
about the ACFE, visit www.ACFE.com.
About AICPA: The American Institute of Certified Public Accountants
(http://www.aicpa.org/) is the national, professional association of CPAs,
with more than 350,000 members, including CPAs in business and industry,
public practice, government, and education, student affiliates, and
international associates. It sets ethical standards for the profession and
U.S. auditing standards for audits of private companies, federal, state and
local governments, and non-profit organizations. It develops and grades the
Uniform CPA Examination nationwide.
SOURCE American Institute of Certified Public Accountants (AICPA)
