8.06

Risk Assessment

Principle 8 - Assess Fraud, Improper Payment, and Information Security Risk

Attribute 8.06 - Management considers the types of fraud that could impact the entity to provide a basis for identifying and analyzing fraud. Fraud involves obtaining something of value through willful misrepresentation. Types of fraud may include the following:

• Fraudulent reporting - Intentional misstatements or omissions of amounts or disclosures in financial or nonfinancial reports through willful misrepresentation to deceive report users. For fraudulent financial reports, this could include intentional alteration of accounting records, misrepresentation of transactions, or intentional misapplication of accounting principles. For fraudulent nonfinancial reports, this could include intentional misrepresentation of information.
• Misappropriation of assets - The unauthorized acquisition, use, or disposal of an entity's assets through willful misrepresentation. This could include efforts to conceal theft of property, embezzlement of receipts, bid rigging, fraudulent payments, or misrepresentation of eligibility to obtain benefits.
• Other illegal acts - Intentional violations of laws or regulations through willful misrepresentation that may be related to financial or nonfinancial activities. This could include certain types of corruption, bribery, extortion, and cybercrimes.

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