Page 9 - RMAI Bulletin July 2024

RMAI BULLETIN JULY 2024

Fraud Risk

Management and

the COSO Internal

Control Framework

Aniket Kirtiwar
Associate Member of ACFE

I n 2013, the Committee of Sponsoring The COSO 2013 IC Framework and

Organizations of the Treadway Commission
Fraud Risk Assessment
(COSO) revised its Internal Control - Integrated
Framework to enhance the clarity and
foundation for designing and implementing effective
functionality of internal control systems. This updated The COSO 2013 IC Framework provides a robust
framework includes 17 principles associated with the internal controls. It emphasizes the necessity of each
five internal control components initially established by principle for maintaining an effective control
COSO in 1992. To be effective, a system of internal environment. Principle 8 specifically mandates that
control must ensure that each of these 17 principles organizations consider fraud risk as a core component
is present, functioning, and operating cohesively. of their risk assessment process.

Among these principles, Principle 8 stands out within To support organizations in aligning with Principle 8,
the risk assessment component: "The organization the COSO 2013 IC Framework serves as a guide for
considers the potential for fraud in assessing risks to performing fraud risk assessments. However, for a
the achievement of objectives." This principle more comprehensive approach to managing fraud risk,
underscores the importance of addressing fraud risk as organizations should look beyond just performing
a critical element of an organization's internal control fraud risk assessments. They should establish a full-
system. This article delves into how organizations can fledged Fraud Risk Management Program, which
integrate fraud risk management within the COSO includes the following components:
2013 IC Framework, outlining approaches and 1. Establishing Fraud Risk Governance Policies
strategies for comprehensive fraud risk assessment 2. Designing and Deploying Fraud Preventive and
and management. Detective Control Activities

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