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Fraud Risk Management Guide, 2nd Edition

Committee of Sponsoring Organizations of the Treadway Commission

Fraud Risk Management Guide, 2nd Edition

NEW UPDATE: The Fraud Risk Management Guide, 2nd Edition is now available in ebook format!

The 2016 Fraud Risk Management Guide contained a widely accepted set of leading fraud deterrence practices for anti-fraud professionals and organizations. However, fraud has continued to evolve, and in response, COSO and ACFE solicited the feedback of a broad range of users, assessed how and where the Guide should be refreshed, and recently released an updated Guide of leading practices for preventing, detecting, and deterring fraud.

The updated Fraud Risk Management Guide, designed to be familiar to COSO Framework users, provides organizations with a comprehensive approach to managing fraud risk, encompassing establishing, monitoring, and evaluating an overall fraud risk management program; performing a fraud risk assessment; implementing fraud risk governance policies and fraud preventive and detective control activities; and conducting investigations. The Guide’s five principles are consistent with the five COSO Internal Control Components and the 17 COSO principles.

The 2023 edition contains numerous changes.  Notably, it:

  • Explains how fraud risk management relates to and supports fraud deterrence.
  • Adds a data analytics Point of Focus to each of the five fraud risk management principles to demonstrate how the use of data analytics is an integral part of each principle.
  • Offers examples to show that many “go-to” internal control processes and procedures may be adequate for ensuring accuracy in accounting and financial reporting but may not provide sufficient fraud protection.
  • Clarifies and emphasizes the steps involved in assessing the effectiveness of existing control procedures as related to fraud risk and residual fraud risk.
  • Includes updated information regarding recent legal and regulatory developments in the U.S. pertaining to fraud and fraud risk management.
  • Contains updated and expanded information related to the importance of fraud reporting systems in detecting, preventing, and deterring fraud.
  • Provides information on changes in the external environment and fraud landscape, including ESG initiatives and reporting, cyber fraud, COVID-19 response efforts, the CARES Act and related programs, remote/hybrid work environments, and new/virtual management tools and accounting procedures.
  • Condenses the 2016 Guide’s 19 appendices to 7, shifting several to ACFE’s Fraud Risk Management Tools website to make them easier to update.
  • Updates and expands the five Fraud Risk Management Scorecards as well as the  ACFE Tools site.