SOC 2 CC3.3: Fraud Risk Assessment
Fraud poses a direct threat to your organization's ability to achieve its financial and operational objectives. SOC 2 CC3.3 requires you to systematically identify, evaluate, and respond to fraud risks across your entity. This control ensures your risk management framework accounts for the realistic possibility of deliberate deception and theft.
What this means
CC3.3 mandates that your entity integrate fraud risk assessment into its broader risk evaluation process. Rather than treating fraud as an isolated concern, you must consider how fraud—whether perpetrated by employees, customers, vendors, or external actors—could undermine your ability to meet strategic and operational goals. This includes assessing the likelihood and potential impact of various fraud scenarios relevant to your business model and industry.
How to comply
- 1.Document all significant fraud risks relevant to your entity's objectives, including asset misappropriation, financial statement fraud, and data theft.
- 2.Define fraud risk scenarios by business process: payroll, procurement, revenue recognition, cash handling, and system access.
- 3.Assess the likelihood and potential impact of each fraud scenario using a consistent rating methodology.
- 4.Identify control gaps that could allow fraud to occur undetected or prevent timely discovery.
- 5.Establish fraud response protocols, including investigation procedures and escalation paths.
- 6.Communicate fraud risk assessment results to relevant stakeholders, including the board or audit committee.
- 7.Review and update fraud risk assessment annually or when business processes, systems, or threats change.
Evidence auditors look for
- Fraud risk assessment matrix identifying scenarios, likelihood, impact, and existing controls
- Business process documentation highlighting fraud-vulnerable transaction types and approval workflows
- Fraud risk policy and whistleblower procedures for reporting suspected misconduct
- Management meeting minutes discussing fraud risks and control effectiveness
- Internal audit reports evaluating fraud detection mechanisms and investigation outcomes
- Evidence of fraud awareness training completion across the organization
- Documented investigation files and corrective actions taken in response to detected fraud
Frequently asked questions
When will FAQs be available?
The FAQ for this control is currently being prepared.
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