Before we start on this journey, I need to explain the premise of my blog. I want to explore whether there is business value in an organization incurring the cost of preparing a comprehensive fraud risk assessment.
Fraud Auditing, Detection, and Prevention Blog
There is an urgent question that I don’t think has been asked often enough: Is the conventional professional view of fraud risk broad enough to protect companies from both monetary and non-monetary impact associated with internal fraud?
There’s a notion in fraud auditing that the auditor should “think like a thief.” I am going to go out on a ledge and raise the question: Is the idea of thinking like a thief a silly suggestion? I ask you, were raised to think like a thief? Did your parents compliment you on your lying skills? Did your teachers praise you on your ability to cheat on a test? Do you and your associates discuss how to steal from your employer at the lunch table? Certainly, the answer is no!
Professional Skepticism… How we can become number one in fraud detection?
If audit desires to be the number one reason for fraud detection, then what does our profession need to do? This blog is written for auditors who desire the audit profession to be the number one reason for fraud detection. I will challenge our current beliefs and methodologies, not to say they are right or wrong but to cause you to think. After all, a key component of professional skepticism is a questioning mind.
Let’s start out with a question: Is the audit profession doing a better job today than 20 years ago in responding to the risk of fraud in audits?
Various studies indicate that whistle blowers and accidents are still the number one reason for detecting frauds while the audit process is still on the bottom of the list. So, I guess the answer to the question is “no!”
I do not, however, think this is a reflection on the people working in the profession but rather the tools, or lack there of, that auditors are using in the audit.
My marketing team has encouraged me to write about the impact of Covid-19. To an extent, writing about the benefits of fraud auditing in the middle of a world crisis does not seem like the right time or place, but there is a greater potential for fraud during times of upheaval. And, we all have bosses, so here I go." FYI, my May blog will be USA centric, I apologize to my world readers.
In my December 2019 blog I stated “I will provide eleven statements in the spirit of causing you to think about your audit plan and help you create a dialog in your company about improving your ability to find fraud risk statements within your audit.”
The remaining three observations are what I have referred to as the “my statement”. These are my predictions, hopes or my aspirations.
In our first blog in a series on fraud data analytics, we identified a ten-step methodology for conducting a fraud data analytics project. In this blog, we will discuss steps nine and ten:
In our first blog in a series on fraud data analytics, we identified a ten-step methodology for conducting a fraud data analytics project. In this blog, we will discuss steps seven and eight: