Role & Duties of Managers in Fraud Detection

NotesQuizCBE

The duties to prevent and detect fraud can be split between:

  • the duties of the board of directors

  • the duties of the audit committee

  • the duties of employees generally (including senior employees below board level).

The duties of the board of directors

  • The board of directors is required by the Combined Code to maintain a sound system of internal control.  

    At least annually, the board should conduct a review of the effectiveness of the internal control system and should report to shareholders.

The duties of the audit committee

  • The audit committee is required by the Combined Code to monitor and review the company's internal control and risk management systems.  

    This should ensure the continuing effectiveness of the controls in preventing and detecting fraud.

The duties of employees

  • The specific duties of employees are set out in their contract of employment and in what they are told to do by their supervisors, but there will always be an implied duty to act honestly and to report suspected or actual frauds encountered to supervisors.  

    Fraud prevention and detection is the responsibility of every employee in a company, not just the board of directors.

NotesQuizCBE