Financial Fraud Risk Assessment
Client background
Our client was a UK PLC FX trading firm providing high touch Foreign Exchange services to clients.
The challenge
The firm had entered a period of rapid growth and their Audit Committee and CFO required a rigorous assessment of the potential for financial reporting fraud risk to be conducted in parallel with the year end results production. A risk and controls assessment covering the entire financial reporting chain was to be executed for their UK regulated entities, reflecting changes in procedures and processes.
Our approach and contribution
Working in close partnership with the firm‘s Finance department and management we:
Provided a small team of highly skilled consultants to work alongside the client’s own staff to deliver the assessments for the financial reporting process for the UK group entities.
Managed the assessment project delivery to a tight timescale aligned to the firm’s results production timetable, working with the client’s Head of Finance and other stakeholders.
Documented process and control maps for each of the business areas contributing to the firm’s financial results, and the subsequent reporting activities conducted within Finance.
Assessed materiality and complexity factors for each of the financial results reporting data sources to contribute to risk assessment.
Developed a risk taxonomy and reviewed with the firm’s financial experts to reflect the financial reporting risks in a structured way, including setting initial inherent risks.
Extracted controls from existing procedure and process maps and aligned these to the risk taxonomy to create a risks assessment framework and template.
Interviewed with firm experts to update the relevant risks, revise the controls and document residual risk ratings, and provided a draft risk assessment for review and assurance.
Facilitated a series of challenge working sessions with finance experts to refine the assessment, assessing the residual risks and identifying improvement opportunities for controls.
Produced a summary of the assessment for the Audit Committee and Boards including recommended actions to further reduce and optimise residual risks.
The outcome
As a result of our engagement:
The project successfully addressed the Audit Committee and Board requirements for an independent assessment of the financial reporting risk, delivering in the required time frame without impacting the parallel work to produce the financial results.
The legal entity Boards were provided with a comprehensive overview of the business risks, the controls deployed and opportunities for improvements, enabling a plan for remediation.
The client was furnished with a comprehensive, repeatable, risk assessment framework and approach, enabling on-going re-assessment without the need for external assistance.
The project also delivered valuable process documentation to assist the firm in scaling their activities.
