dis 5

.docx

School

Pfeiffer University *

*We aren’t endorsed by this school

Course

301

Subject

Information Systems

Date

Dec 6, 2023

Type

docx

Pages

Uploaded by Mahoganyreyes90

Discussion Risk Assessment: An evaluation of the organizational components where there may be a fraud risk is known as a fraud risk assessment. Auditors look at the assets, financial records, and disclosures of the company. This procedure aims to identify potential fraud risks to the company, including external and internal fraud, analyze those risks, and create a plan of action for reducing or eliminating such risks. Risk assessments should consider an organization's IT risk posture because the corporate information technology sector carries a high risk of fraud. While the types of fraud differ depending on the business line, provider fraud and the theft of private information are examples of external fraud, while embezzlement and asset misappropriation are examples of internal fraud. ( What Is a Fraud Risk Assessment? And Why Do I Need One? | AuditBoard , n.d.) A methodical procedure for determining the qualitative characteristics of possible integrity breaches is a fraud risk assessment. When properly carried out, these evaluations can assist companies in determining the incentives and pressure points that give birth to some of the most significant integrity-related issues that affect them and their stakeholders. Crucially, a finished assessment can serve as a basis for developing a suitable response to reduce the risk of fraud and misconduct and assist management in preventing losses brought on by these issues. (Hedley 2020) When a risk assessment is initiated, two primary design considerations become apparent right once. The first step involves choosing whether to do the assessment alone or in tandem with an enterprise-wide or comparable risk management program. Secondly, the organization should designate the ultimate person responsible for carrying out the assessment, including those in charge of its design, execution, and evaluation. Typically, senior management takes each of these decisions based on factors specific to the company. The fraud and misconduct risk assessment normally consists of four basic steps after these decisions are made: identifying business units, locations, or processes to evaluate; inventorying and classifying fraud and misconduct risks; rating risks according to the probability and importance of occurrence; and remediating risk through control optimization. (Hedley 2020) To protect your business, you need to make improvements to your current agreements and be aware of potential vulnerabilities. This is why you should follow these four simple steps to conduct a comprehensive fraud risk assessment. Identify business units, location, or processes to assess: Firstly, you need to assess your current operations and processes. To do this, you could refer to historical data as well as emerging trends and patterns. (Callister, 2023) After deciding which level to analyze at, the group should think about who will contribute to the evaluation. the participation of staff members at all levels, including operations management, legal counsel, internal audit, senior management, and those with specialized expertise of the company, from within the organization, the business unit, or a specific geographic location. offers a variety of viewpoints to help guarantee that the widest possible range of hazards is taken into account. ( Hedley 2020) Additionally, it guarantees that the elements causing various fraud risks are recognized and taken care of. It is critical to assess which individuals and departments are most likely to perpetrate fraud as well as the techniques they most likely to employ. Analyze the risks associated with information technology, regulatory and legal misbehavior, management's potential to override controls, incentives, pressures, and chances for fraud. By recognizing these elements, you may develop a risk that works. ( What Is a Fraud Risk Assessment? And Why Do I Need One? | AuditBoard , n.d.)

Inventory and categorize fraud and misconduct risks: In certain industries, some kinds of fraud are more prevalent than others. For instance, banks are susceptible to fraud involving checks, deposits, and mortgages from third parties. In a similar vein, insurance firms are particularly vulnerable to claim fraud. Software and telecom firms are susceptible to schemes of revenue recognition: The dangers associated with inventory manipulation and theft exist in production operations. (Hedley 2020) The most widely used methods of information collection include interviews, focus groups, and documentation reviews. Assessment of hazards Confidential interviews are typically conducted with individuals who possess specialized knowledge, risk management expertise, or operational accountability that is directly related to important areas of fraud and misconduct risk. The objective is to have a broad understanding of the organization's internal control architecture, risk area, mitigation strategies, and culture and climate. (Hedley 2020) Evaluating how much fraud risk has been taken into account while creating rules, processes, and controls is crucial. (Hedley 2020) A focus group is comprised of selected individuals who are asked in a group setting about their perceptions and reactions towards specific topics. (Hedley 2020) Rate risks based on the likelihood and significance of occurrence: The assessment team should calculate the potential consequences of an integrity breakdown in addition to the risk that it would occur. Conversely, qualitative characteristics are usually not quantifiable in monetary or commercial terms. Qualitative issues could include things like bad press, reputational harm, C-level executives being forced out or resigned, financial restatements, regulatory action or probation, or difficulties meeting market goals. (Hedley 2020) Remediate risk through control optimization: Once the residual risk matrix is formulated, the organization can identify the process, controls, and other procedures necessary to mitigate the identified risks based upon the assessment of the risk identified and the available resources to management. (Hedley 2020) Regarding managing a Christian enterprise, the Bible teaches that it is prudent to consider the future, evaluate the possible risks, and choose how to seek safety from those risks. According to Proverbs 22.3, a prudent man recognizes danger and flees, but the simpleton continues and pays the price. Risk has two faces: the assumption of risk (often motivated by a well-informed conviction that there is a good probability that harm or loss won't occur) and putting one's faith in the Lord. When a risk is taken, the person taking it must have faith in something to partially offset the risk. Many of us buy insurance to help defray the risk we take on. For the rest of us, taking a risk is simply based on trusting the Lord, knowing that He is sovereign over our lives and loves us. Some of us, however, do both: we buy insurance and put our faith in God to provide the results. Though in broader terms, the Scriptures also address risk. On the other hand, I think that there are certain scriptural lessons concerning trust and risk. (English, 2021) English, B. (2021, January 9). Assuming risk as a Christian business owner . Bible and Business. https://www.bibleandbusiness.com/2020/09/02/assuming-risk-as-a-christian-

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help