2-2 Short Paper: Fraud Risk Assessment
ACC-421-R1466 Auditing and Forensic Accounting
Southern New Hampshire University
Alexandra Dewey September 12, 2021
The article I chose, "Goldman Sachs Ensnarled in Vast 1MDB Fraud Scandal," reads
that Goldman Sachs faced a multibillion-dollar international fraud that investigators presume
was masterminded by a financier and carried out with help from Wall Street bankers.
Prosecutors rendered charges against Tim Leissner, a former Goldman Sachs banker, a second
banker, and a Malaysian businessman. They are believed to have stolen billions of dollars
from a state-run investment fund in Malaysia (The New York Times, 2018).
The original initiative of the money was to be used to assist Malaysian people
Different projects were nicknamed to cover up the scheme about whom to bribe to win
contracts for bond issues. However, the millions of dollars raised from these projects were
funneled to so-called shell companies.
Fourteen diamond-studded tiaras, $30 million worth of jewelry, along with a 22-carat
diamond necklace amounting to $27.3 million alone and $44 million from Mr. Leissner, were
seized because they arose from the proceeds received from 1MDB (1Malaysia Development
Berhad).
Fraud occurs worldwide, whether internal or online and may be ongoing over many
years. Amador Testa, a fraud expert, visited Mexico, Brazil, and the United Kingdom to identify
worldwide fraud trends. Mexico, first in current fraud rates in 2017, tends to experience issues
with internal fraud. Brazil experiences credit card numbers and identities being stolen and are
used to commit fraud. The United Kingdom uses secure authentication, which opens fraud
opportunities to persons who do not reside in the U.K (Emailage, 2018).
For this reason, a fraud risk assessment should be a top priority to minimize fraudulent
activity. There are three best practices of fraud risk assessments: Leader(s), Team and Frequency,
and Alignment with Finance (Singleton, 2018).
There should be a person or a group with independence and support risk management.
This person or group can be from the internal audit function (Singleton, 2018)
A well-put-together team should start with an internal expert and requires a broad cross.
section of the entity. The team should be represented by all business units and
perspectives necessary to provide a quality risk assessment (Singleton, 2018)
Risk management should be conducted every 1-2 years. These checkups would allow
fraud risk assessments to align with the typical financial planning and reporting time
frames (Singleton, 2018).
Aside from the best practices for fraud risk assessment, there is also a risk management
checklist of questions. Each question has three options to select: Yes, No, and N/A (Singleton,
2018). Some examples of queries are:
Is it the organization's policy to immediately dismiss any employee who is found to have
committed fraud?
Does the organization have a written code of ethics and business conduct?
Overall, does management exhibit an awareness of fraud and its possible manifestatio