FRAUD RISK FACTOR
Looking the above picture don't thing that the fraud fighting is a matter of police.
The right approach is below.
Fraud generally occurs when the three conditions beloe are present. They dramatically increase the financial risk:
1• Management or employees have an incentive or are under pressure;
2• Circumstances due to lack of assessment and mismanagement provide an opportunity
for fraud to be perpetrated;
3• Individuals under stress, greed, or stupidity are in a state of deceptive action.
The ineffective monitoring of management is result of the following:
Domination of management by a single person or small group
without having undergone special training.
Ineffective board of directors or audit oversight over the financial
reporting process and internal control.
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Internal control components are deficient as a result of the following:
I. Inadequate monitoring of controls, including automated and controls over interim financial reporting (where external reporting is required).
II. High turnover rates or employment of ineffective accounting, internal audit, or information technology staff (when it's agreed, IIC brings the internal audit and monitoring and perform these functions online).
III. Ineffective accounting and information systems,
including situations involving reportable conditions.
