A fraud response plan can be defined as a plan put in place by an organization to help establish authority levels, action roles and reporting lines in a case where fraud is suspected. If fraud is suspected, it should be reported to either your line manager, internal audit, finance director, officer in charge of procurement or monitoring or an external agency.
The plan should be in place to help guarantee that an organization responds quickly and effectively to suspicious fraud-related activity, whether fraudulent activity has happened. In the event of a suspected fraud, this plan serves as a checklist of steps to do. A fraud response plan not only enables an organization’s management to respond to suspected and detected fraud situations in a consistent and comprehensive manner, but it also sends a message that management takes fraud seriously.
The following are included in a fraud response plan:
• The purpose
• Legal definitions of fraud and policies related to fraud allegations
• Aim and objectives
• Dos and Don’ts
• Investigation process
• Internal reporting system
• Recovery action initiation
The Plan’s Goals and Objectives
1. Prevent additional loss
2. Recover and minimize any damages that have happened.
3. Gather and secure evidence for civil, criminal, and/or disciplinary action.
4. Assign investigation tasks.
5. Determine whether to involve the authorities.
6. Examine the causes of the occurrence, the steps taken to prevent a recurrence, and any steps that need to be made to strengthen future responses to fraud
Members of the fraud response team will vary depending on the facts and severity of the suspected fraud, but they may include:
• A management representative
• legal counsel
• Finance director
• A Certified fraud examiner
• Audit committee members
• An internal audit representative
• An HR representative
• IT personnel
• A C-level executive
The Fraud Response Team’s responsibilities include, but are not limited to, the following:
• Determine whether an investigation is required
• Determine who will lead the investigation
• Determine whether legal advice is required immediately
• Determine whether police involvement is required immediately
• Determine whether the chair of the audit committee should be notified
• Determine whether additional resources are available to support the investigation
• Determine whether external, technical assistance is required immediately.