Fraud Risk Assessment Checklist

• Client / Site

• Location
  Address

• Conducted on

  Date

• Prepared by

Culture of Honesty and Ethics

• Setting the Tone at the Top:

• Is there a written Code of Conduct?

  Yes

  No

  N/A

• Is the Code of Conduct disseminated to all employees at time of hire?

  Yes

  No

  N/A

• Is there at least annual refresher training on the code of conduct for every employee?

  Yes

  No

  N/A

• Is there a method of determining that employees understand the contents of the code of conduct?

  Yes

  No

  N/A

• Do employees have a communication avenue for asking questions when ethical situations arise?

  Yes

  No

  N/A

• Is there a Confidential Reporting Mechanism for employees to use to report suspected or possible fraud without fear of reprisal?

  Yes

  No

  N/A

• Is the Confidential Reporting Mechanism contact widely advertised so that all employees are aware of it?

  Yes

  No

  N/A

• Is there a protocol for handling all Confidential Reporting Mechanism activity?

  Yes

  No

  N/A

• Is activity of the Confidential Reporting Mechanism reported to executive management and the board?

  Yes

  No

  N/A

• Creating a Positive Workplace Environment:

• Is there an employee recognition and reward system or compensation program?

  Yes

  No

  N/A

• Is there a whistleblower policy, a system for employees to obtain advice internally before making decisions that have significant legal or ethical implications, and/or a process to encourage employees to communicate or report, on a confidential or anonymous basis, without fear of retribution, concerns related to wrongdoing or violations?

  Yes

  No

  N/A

• Hiring and Promoting Appropriate Employees:

• Are background checks, both criminal and work, performed on employees, especially those in positions of trust?

  Yes

  No

  N/A

• Training:

• Is there a mechanism for tracking employee training and understanding of the code of conduct?

  Yes

  No

  N/A

• Notification and Confirmation:

• Are employees held accountable for proactively addressing the potential of fraud in the discharge of their assigned duties?

  Yes

  No

  N/A

• Are awareness of fraud and the management of fraud risks included in every managers (perhaps employees) personnel evaluation?

  Yes

  No

  N/A

• Discipline:

• Are there consequences for employees who commit fraud and are those consequences consistent and fair?

  Yes

  No

  N/A

• Are consequences pre-determined, that is defined in a fraud policy?

  Yes

  No

  N/A

• Is there a formal procedure for documenting the consequences of each proven fraud?

  Yes

  No

  N/A

Antifraud Processes and Controls

• Implementing and Monitoring Appropriate Internal Controls:

• Is risk assessment performed by each division, location, or segment separately?

  Yes

  No

  N/A

• Are possible misconduct schemes, fraud scenarios, fraud categories, and applicable business activity or process identified?

  Yes

  No

  N/A

• Were consequences posed by each scheme and were management’s tolerance for risks considered? (e.g Reputation damage, Financial damage - Monetary loss; Legal damage – Criminal or civil sanctions)

  Yes

  No

  N/A

• Were they documented?

  Yes

  No

  N/A

• Were red flags of fraud considered in the evaluation? Personal characteristics or situational

  Yes

  No

  N/A

• pressures that can lead to fraud; Agency opportunities that can lead to fraud; Opportunities that allow or encourage management fraud

  Yes

  No

  N/A

• Was the likelihood that each particular fraud will occur evaluated? Remote; Reasonably possible; Probable

  Yes

  No

  N/A

• Were direct or indirect controls applicable to above-documented scenarios identified? Basic controls include: Segregation of duties relating to authorization, custody of assets, and recording and reporting of transactions; Supervisory reviews, verifications,

  Yes

  No

  N/A

• reconciliation; Automated edit checks and system controls; Physical and logical security of assets; Embedded audit checks; Fraud detection software

  Yes

  No

  N/A

Appropriate Oversight Process

• Commission or Board of Directors:

• Is there a communication mechanism by which executive management and the board is made aware of antifraud programs, controls, and results?

  Yes

  No

  N/A

• Are they advised of the potential fraud risks in the agency?

  Yes

  No

  N/A

• Are they made aware of the elements of the agency’s antifraud programs and controls?

  Yes

  No

  N/A

• Are they advised of all actual frauds and the actions taken to mitigate future similar frauds?

  Yes

  No

  N/A

• Are they advised of activity to the Confidential Reporting Mechanism?

  Yes

  No

  N/A

• Management:

• Is there a member of executive management designated as the responsible party or point of contact for the fraud prevention?

  Yes

  No

  N/A

• Is this person the liaison with the Office of the Inspector General?

  Yes

  No

  N/A

• Does this person provide continuous reinforcement of the antifraud programs to all employees?

  Yes

  No

  N/A

• Is this person responsible directly to executive management and the board for the antifraud programs of the agency?

  Yes

  No

  N/A

Completion

• Full Name and Signature of Inspector

  Sign