Fraud risk assessments have become essential in today’s corporate environment, but many companies still struggle with understanding who should be responsible for them and how to conduct them effectively. COSO’s 2013 framework, specifically Principle 8, places the responsibility on management to evaluate fraud risk, yet many organizations rely on internal audits to handle this task.

Since the Sarbanes-Oxley Act of 2002, following major scandals like Enron, fraud prevention and detection have remained a critical focus, especially with the rise of cyber fraud and the challenges posed by remote work. The updated COSO 2013 framework expanded internal control objectives and emphasized a top-down risk assessment approach, as reinforced by PCAOB Auditing Standard 5. However, identifying all potential fraud scenarios remains complex, and relying solely on internal audit assessments may not meet COSO’s latest guidelines, requiring organizations to take a more comprehensive approach.