Question

Background:

Companies subject to Sarbanes-Oxley must now implement “antifraud programs and controls” that are evaluated annually during the integrated audit6. Although most of these companies have
already implemented components of an anti-fraud program such as codes of ethics and conduct,
they may need to enhance their programs to meet the requirements of the new law and to avoid
an auditor’s finding of a “significant deficiency” or “material weakness” in internal controls7.
Private companies should also have an understanding of effective fraud management, particularly
if their strategy contemplates a public debt offering, IPO or sale to a public company. Apart from
mitigating legal and regulatory risk, fraud management provides significant cost savings opportunities, which directly affect the bottom line.

The COSO Internal Control Framework
Management must base its assessment of the effectiveness of the company’s internal control over
financial reporting on a suitable recognized control framework established by a body of experts.
In the United States, the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission has published Internal Control – Integrated Framework9, which has emerged as the framework that management and auditors use to evaluate internal controls. Accordingly, we apply
the COSO framework because most companies and auditors in the United States use it to assert and
audit the effectiveness of internal controls.

Applying the five components of the COSO internal control framework (control environment, risk

assessment, control activities, information and communications, and ongoing monitoring), this white

paper (1) enumerates the attributes of good program design and operating effectiveness and (2)

provides guidance regarding the kinds of deficiencies that typically result when one or more of these

key elements are absent or ineffective.

Although antifraud programs and controls must include all five components of the COSO

framework, special emphasis is on the control environment, the tone set at the top of an

organization that influences the control consciousness of its people.

Now back to main issues:

What is The Anti-fraud programs and Controls, what is their effective elements, and "talk in details about the Elements of effective antifraud programs and controls,"?

Answer 1

ANSWER TO YOUR QUESTION:

What is The Anti-fraud programs and Controls?

1. Management is ultimately responsible for detecting, preventing and responding to fraud.
2. An anti-fraud program, aligned with a company’s compliance framework, demonstrates that management is setting the proper goal/ target  to address its fraud and compliance risks in its business operation as well as over financial reporting.
3. An anti-fraud program is a mitigation measure to managing fraud risk by allowing organizations or management to identify and prioritize fraud risks and allocate resources to address them. Although complete elimination of all fraud risk is most likely unachievable or uneconomical, organizations can take positive and constructive steps to reduce their exposure.
4. The combination of effective fraud risk governance, a thorough fraud risk assessment, strong fraud prevention and detection (including specific antifraud control processes), as well as coordinated and timely investigations and corrective actions, can significantly mitigate fraud risks

What is elements of effective antifraud programs and controls?

The elements of effective antifraud control process to critically look into the following matter:-

1. Establishes a visible and rigorous fraud governance process
2. Making of Proper Plan
3. Creates a transparent and sound anti-fraud culture
4. Designs, implements, and maintains preventive and detective fraud control processes and procedures
5. Promote honest and ethical conduct
6. Provide full, fair, accurate, timely and understandable disclosure in reports and documents
7. Comply with applicable laws, rules and regulations
8. Report internal violations of code promptly
9. Assess the types of frauds that can impact business
10. Ways that fraud can be occur
11. Address fraud risks in light of changes in the operating environment of the Organization
12. Understand fraud risks through business partners
13. Review results of the fraud risk assessment undertaken
14. Use of forensic technology and data analytic

Antifraud Risk Management programs and controls

Fraud Risk Governance- The organization establishes and communicates a Fraud Risk Management Program that demonstrates the expectations of the board of directors and senior management and their commitment to Control high integrity and ethical values regarding managing fraud risk.

Fraud Risk Assessment- The organization performs comprehensive fraud risk assessments to identify specific fraud schemes and risks, assess their likelihood and significance, evaluate existing fraud control activities, and Risk implement actions to mitigate residual fraud risks.

Fraud Control Activity- The organization selects, develops, and deploys preventive and detective fraud control activities to mitigate the risk of fraud events occurring or not being Control detected in a timely manner.

Fraud Investigation and Corrective Action- The organization establishes a communication process to obtain information about potential fraud and deploys a coordinated approach to investigation and corrective action to address fraud Information & appropriately and in a timely manner.

Fraud Risk Management Monitoring Activities- The organization selects, develops, and performs ongoing evaluations to ascertain whether each of the five principles of fraud risk management is present and functioning and communicates Fraud Risk Management Program deficiencies in a timely manner to parties responsible for taking corrective action, including senior management and the board of directors.