What is an appropriate action if a company identifies a moderate-to-high risk of fraud?

When a company identifies a moderate-to-high risk of fraud, enhancing audit procedures to look for fraud is a critical and appropriate action. This is primarily because increased scrutiny helps in detecting and preventing fraudulent activities. By intensifying audit procedures, companies can identify vulnerabilities in their processes and implement controls to mitigate the risk.

Enhanced audit procedures may include more frequent and detailed audits, the application of data analytics to monitor transactions, and employing specialized fraud detection methods. These actions help create a proactive approach to fraud prevention, ensuring that potential risks are addressed before they escalate into actual fraud incidents.

In contrast, ignoring the findings or reducing employee training would likely exacerbate the issue, as it would leave the organization unprepared to recognize or combat fraudulent behavior. Similarly, eliminating auditing functions would completely undermine the organization's ability to monitor risks and strengthen their fraud prevention framework, making them more susceptible to fraud. Therefore, reinforcing audit procedures is a strategic move that not only acknowledges the identified risks but actively works to minimize their impact.