Guidelines for the Audit Committee’s assessment and response to the Risk of Fraud
The Position Paper 4 provides guidelines for the Audit Committee’s assessment and response to the risk of fraud. It provides the tools for Audit Committees to proactively and rigorously detect, deal with and prevent the perpetration of fraud in the company.
Fraud can produce devastating effects on businesses. It cannot therefore be dismissed as a potential one-off risk and treated as a remote possibility. Despite an increasing multiplicity of safeguards put in place, the recurrence of fraud in one location after another, indicates that only a proactive approach adopted by persons in charge of dealing with it can help mitigate its risk. An Audit Committee would be loath to endorse the correctness of financial statements which are later found out to be tainted with fraud. It is one reason why Audit Committees should be ever on the alert about potential elements of fraud.
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