COVID-19: Fraud Survey - Adapted from a KPMG newsletter available at:

Fraud is an increasing concern in corporate Australia due to the COVID-19 pandemic.

In the KPMG survey, seven percent of executives said they had already seen fraudulent or corrupt behaviour that they would attribute to COVID-19 era working conditions - and an overwhelming 83 percent believed their organisation was vulnerable to fraud taking place now. The survey, which 85 senior executives responded to, was performed in mid-April 2020, and included ASX companies, government agencies, multinationals, and large private Australian companies. While the internal threat organisations are feeling of fraud was clear from the survey, almost 95 percent of respondents also expected a rise in cyber fraud as a result of the crisis.

KPMG argues that a driving factor of the increase in fraudulent and corrupt behaviour is a result of the workforce working remotely, which means internal controls are under greater pressure and often no longer fit for purpose. Financial controls are not adapting well to the mass remote working environment. Staff reductions resulted in segregation of financial functions becoming vulnerable to override, the ability to verify if goods or services have been received is impeded, and hasty information system workarounds to get things done are becoming more common. All these factors potentially compromise the overall integrity of a business' s computerised accounting information system.

KPMG recommends that organisations should urgently review their existing financial control environment and implement increased transactional reviews, exception reporting or other controls, ideally through data analytics or other mechanisms.

QUESTION : 1. Explain the 5 integrated components of the COSO Internal Control Framework. Follow the link and read the original newsletter. After reading the newsletter, which explains the results of the KPMG survey above, indicate for each component how the COVID-19 pandemic may impact on the controls supporting a business' s computerised accounting information system and/or what management response is required.

2.Explain whatmonitoring control activities (refer to COSO and COBIT 5) should be performed toprevent and detect fraud and corrupt practices in the COVID-19 era (referred to in the KPMG recommendations). Read the follow-up KPMG newsletters on this topic and then give practical examples where similar control activities will be appropriate for the hypothetical client, Cantstand Fraud Ltd.