Internal financial fraud
Misappropriation of funds or assets by employees.
The risk event
Misappropriation of funds or assets by employees
Theft, false accounting, or other internal fraud by personnel with access to financial assets.
What could cause it, and what stops it
The left-hand side. Each cause is a plausible pathway to the event; the controls beneath it are the barriers that reduce the chance of that pathway completing.
Lack of segregation of duties
A single role can both initiate and approve transactions.
- SoD matrixDirective · Effective
Documented segregation requirements per process.
- Role-based accessPreventive · Limited
System enforcement of role separation.
- Periodic reviewDetective · Limited
Quarterly review of role-to-user mappings.
Insufficient oversight on payments
Payment process lacks enough checkpoints to detect manipulation.
- Dual approvalPreventive · Effective
Two-person approval for payments above threshold.
- Bank account whitelistPreventive · Effective
Locked-down list of permissible payee accounts.
- Exception reportingDetective · Limited
Automated alerts on unusual payment patterns.
Pressure or incentive misalignment
Personal financial pressure or aggressive incentives motivate fraud.
- Ethics trainingPreventive · Limited
Annual ethics and code-of-conduct training.
- Whistleblower hotlineDetective · Effective
Anonymous reporting channel.
Weak vendor onboarding
Fictitious or compromised vendors are added to the master.
- Vendor master reviewDetective · Limited
Periodic review of active vendor master.
- KYC checksPreventive · Effective
Identity verification for new vendors.
- Sanctions screeningPreventive · Effective
Automated screening at onboarding and periodically.
What happens if it occurs, and what limits it
The right-hand side. Each consequence is an outcome the event could produce; the controls beneath it are what contains or recovers from that outcome once the event has already happened.
Direct financial loss
Funds or assets misappropriated.
- Fidelity insuranceCorrective · Effective
Cover for employee-fraud losses.
- Recovery processCorrective · Limited
Civil and criminal recovery playbook.
Restatement / audit findings
Material restatement or qualified audit opinion.
- External auditDetective · Effective
Annual statutory audit.
- Internal audit programDetective · Limited
Risk-based internal audit coverage.
Reputational damage
Erosion of stakeholder trust on disclosure.
- Board reportingCorrective · Effective
Timely escalation to audit committee.
- Stakeholder communicationCorrective · Limited
Pre-approved messaging for material findings.
Regulator scrutiny
Investigation or enforcement action by financial regulators.
- Regulator notification protocolCorrective · Effective
Documented self-reporting workflow.
- Governance reviewCorrective · Limited
Independent review of governance framework post-incident.
Where this template starts you
Ratings are a starting position, not a finding. They describe a generic organisation with the controls above in place; yours will differ, and the point of opening the template is to make them yours.
Make it yours
Opening the template loads it into the editor with everything above already in place. Rename the event, cut the causes that do not apply, and re-rate against your own matrix. Exports to PNG, PDF, Excel and PowerPoint are built in.