Forensic Investigations Regulations

Posted: November 30th, 2013

Forensic Investigations Regulations






Forensic Investigations Regulations

Risk Assessment Checklist

Risk Assessment Checklist




1.   Does the company have an adequate level of fraud awareness, and are appropriate policies in place to minimize fraud risk, specifically:

a.   Generic risk factors

  • Has the company assigned each employee a maximum “opportunity level” to commit fraud, that is, has management asked itself the question, “What is the maximum amount this employee could defraud the organization, and does this represent an acceptable risk?”

Comments: I was not able to find out about this risk factor.

  • Has the company set a catastrophic opportunity level; that is, has management asked itself the question, “Have we ensured that no single employeeor group of employees in collusioncan commit a fraud that would place the organization in imminent risk of survival?”

Comments: I was not able to find out about this risk factor.

  • Does the company have a policy of immediately dismissing any employee who has committed fraud?

Comments: employees who are found guilty of committing fraud are immediately laid off.

  • Does the company have a policy of reporting all frauds to the authorities and pressing charges?

Comments: the management does not report all fraud cases some are solved internally.

  • For all frauds experienced by the company in the past, has management evaluated the reasons that led to the fraud and taken corrective action?

Comments: the management has not taken time to investigate why fraudulent activities take place within the company. 

b.   Individual risk factors

  • Does the company have a corporate mission statement, which includes an objective of good citizenship or the maintenance of good standing in the community?

Comments: the company’s mission statement is “to be a leader”

  • Does the company have a written code of ethics and business?

Comments: the code of ethics is important when running any business

  • Does the organization conduct ethical and security training for new employees and periodic updates for existing employees?

Comments: employees are trained before they start work and during their employment period.

  • Does management set the right example; that is, does it follow the company’s mission statement, code of ethics and business conduct, and other policies of the organization; and is it clearly seen to be doing so by employees?

Comments: the management does not set the best example to the rest of the employees given by the rise in cases of fraud within the company

  • Does the company’s culture avoid characteristics that promote unethical behavior, for example, high or even hostile competitiveness within the organization that might push employees to the point of burnout; pointless rigid or petty policies, or both; over centralization of authority?

Comments: I could not find information on this matter

  • Do The organization’ hiring policies, to the extent possible, seek out individuals of high moral character and weed out those of low moral character?

Comments: extensive vetting and training is done to ensure the right candidates are picked for the job.

  • Does the company’s use screening and/or testing procedures for especially sensitive positions; for example, psychological tests, drug tests, or lie detector tests, or a combination of all three, where permitted by law?

Comments: this is important for efficient productivity by the potential employees

2.   Does the company have an adequate system of internal controls, specifically:

a.   Internal control

  • Has the organization explicitly considered the need for fraud prevention in the design and maintenance of the system of internal controls?

Comments: the internal system is not adequate


Risk Management Checklist




b.   Control over physical and logical access

  • Does the company state and enforce a policy that restricts access to those requiring it for job performance, including a strict policy against employees allowing access to unauthorized personnel, for example, by loaning keys or sharing passwords?

Comments: access is granted to anyone

c.   Job descriptions

  • Does the company have written specific job descriptions?

Comments: job descriptions determine who works where and distinguishes authority

  • Are job descriptions adhered to?

Comments: not all employees adhere to their job descriptions

  • Does the organization have an organization chart that reflects and is consistent with the job descriptions of its employees?

Comments: this is a contributing factor for fraud because there is no supervision

  • Are incompatible duties segregated, for example, the handling of valuable assets—especially cash—and related records?

Comments: there is no segregation of duties within the company

d.   Regular accounting reconciliations and analyses

  • Are budgets reviewed for variances?

Comments: budget reviews are important in organizations

e.   Supervision

  • Do supervisors and managers have adequate fraud awareness, that is, are they alert to the possibility of fraud whenever an unusual or exceptional situation occurs, such as supplier or customer complaints about their accounts?

Comments: the supervisors do not have efficient information on fraud in the company

  • Do supervisors and managers diligently review their subordinates’ work, for example, accounting reconciliations, and redo the work when appropriate?

Comments: work reviews are not satisfactory

  • Is supervisory or management override prohibited and are others within the firm alert to the fraud risks associated with management override?

Comments: employees are not fully aware of fraud associated with the management override

Risk Assessment Checklist




3.   Has The organization specifically addressed the following fraud prevention issues:

a.   Ethical Environment
b.   Risk Financing
  1. Computer Security

Comments (a-c): the organization has taken preventive measures in the ethical environmental and risk financing. However computer security needs to be improved

Fraudulent Financial Reporting

  1. Is the organization’s financial stability or profitabilty threatened by economic, industry, or entity operating conditions?

Comments: the economy affects the stability of all businesses and organizations

  1. Is there excessive pressure on management or management incentives related to reaching earnings expectations or certain revenue benchmarks?

Comments: there is no pressure because the company operates according to its earnings

  1. Are there significant balances in the financial statements which are based on subjective management estimates?

Comments: the financial statements do not always balance, which is risky in terms of promoting fraud


Reasons for comments

The comments indicated in the above checklist are after careful study of the organization and its operations. There have been cases of employees losing their jobs after being found guilty of fraudulent activity within the company (Pasiuk $ Vault, 2005). This is the right thing to do because it sets examples to the other employees. With the number of fraud cases within the company, the management should report to the relative authorities so that the same is avoided. The management does not take time to investigate the reasons why they are fraud within the company. Investigations would promise a reduction on the fraud cases. The organization has a mission and vision statement that helps to run it. A code of ethics is important in every organization and Kroger’s has adopted one for the organization. Kroger’s train their employees and they are known to pick some of their potential employees from universities and colleges. There are always cases of fraud within the organization sometimes involving the management meaning the management does not set the best example to the rest of the employees.

Their employees are screened to ensure that their productivity is optimal. They have a substandard internal system. Access to some of the most confidential document and files is not limited. The job descriptions are not respected by all employees because job description is not clearly defined. This means that there are those who are exploited and this is unfair. The supervision is not adequate as the supervisors lack sufficient information to know and detect fraud within the company. The rest of the employees do not know about fraud by management overrides and this exposes the organization to higher fraud risks. There are annual budget reviews in the organizations that reflect the expenditure and income of the business (Pasiuk & Vault, 2005).


I recommend asset identification and registration, which includes revenue collection, expenditure, supplies ad computers at the organization. The management should also recognize the risks involved with protecting these assets. The risks involve knowing when assets are being misused and if they are getting lost within the company and finding ways of preventing this (Biegelman & Bartow, 2012). Positive control should be made aware to all the staff members to demonstrate responsibility. The internal control system in the company should be effective. This includes sufficient supervision, inventories and appropriate documentation. This will ensure that there is no unofficial use loss or damage of company assets. Every employee should be allocated specialized responsibility for effective and efficient cohesion in terms of fraud prevention in the work place. The responsibilities should be clearly defined for instance they should know the different levels of authority within the organization. This will also reduce over reliance on one person and prevent abuse.

I recommend the managers to take keen supervision measures to ensure that productivity is optimum. Supervision includes control checks of lower level staff and it will help them to detect any cases of fraud (Biegelman & Bartow, 2012). Random checks by the supervisors will be an effectual anti-fraud measure. Kroger’s should adopt an audit trail as a measure of fraud detection. It ensures that all controls are checked and reviewed through a system. Effective monitoring and evaluation should be done periodically by an independent team. This will make clear any fraudulent activity within the company. Satisfactory staffing should be made to ensure that the system works effectively. Staffing should not be done without thorough vetting and interviews. Financial and accounting controls should be done by the delegated people in the company. This will reduce risks of fraud. The systems within the company should be developed, modified and upgraded to the latest versions for efficiency. Treatment of staff members is important. They should be allowed leave days, promotions, health benefits and they should not work under stress (Biegelman & Bartow, 2012). All these are contributors of fraudulent activities within companies.

As an anti-frau preventive measure, Kroger’s should have an auditing committee. This committee identifies fraud risks and implements their prevention procedures. It will also ensure transparency by the senior management team. The committee should be assisted by anti-fraud specialists. The management should provide the rest of the employees with opportunities to report concerns about suspected fraud within and without the company. They should have both internal and external auditors. Internal auditor will help in the deterrence of fraud and the external auditors should liaise with internal auditor to ensure zero tolerance for fraud (Biegelman & Bartow, 2012). It is important to have an ethics policy and a fraud policy within an organization. This is made available to the employees upon employment and sporadically during their term of employment. Adoption of these measures will guarantee a prevention and reduction of fraudulent activities within the company.









Biegelman, M. T., & Bartow, J. T. (2012). Executive roadmap to fraud prevention and internal control: Creating a culture of compliance. Hoboken, N.J: Wiley. Print.

Pasiuk, L., & Vault (Firm). (2005). Vault guide to the top retail employers. New York: Vault Inc. Print.

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