The audit standards state that one of the reasons auditors fail to detect fraud is that they don’t know what it looks like. Prior to the original SAS No. 82, Consideration of Fraud In A Financial Statement Audit, nowhere in any SAS was there a description of what fraud looked like. So, as they say, if you don’t know what you are looking for, you can often look right at it and not recognize it! This presentation illustrates some of the more common indicators of fraud they most individuals would overlook unless they 1) knew what they were looking for and were 2) actually looking for it. Contrary to what the standards say about fraud being concealed, I have found that fraud is often laying on the table right in front of you; but no one has discovered it because they have no idea what the indicators of fraud are.
Learning Objectives
- Recognize the indicators of fraud
- Develop and maintain a questioning attitude at all times Analyzing the importance of professional skepticism
- Understanding the fraud triangle and what segment management can control Illustrate
- The Perception of Detection Assessing how much we rely on documentation and why we really ask for it
Major Topics
- Why auditors fail to detect fraud
- Usual vs an unusual transaction
- Why fraud and stupid often look exactly the same
- The importance of establishing the Perception of Detection
- The number one reason fraud occurs
- Looking for things that should be there
- Looking for things that should not be there
