Prevention & Detection

     Fraud Prevention & Detection -  Section Three


Articles published in 2004 & 2005


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Fraud Prevention 101


DECEMBER 2005: Fraud is an industry unto itself, causing annual losses to United States companies totaling at least $660 billion. While it’s easy to focus on the big losses incurred by the likes of Enron, Tyco, and WorldCom, no company is immune to the problem. Companies of all sizes are vulnerable, even though their risks may be different.


The impact of fraud hits a company straight in the bottom line. While large corporations may be able to withstand a six-figure or seven-figure fraud, a smaller corporation or a nonprofit organization may never recover. In order for survival in today’s competitive marketplace, businesses must be proactive in the fight against fraud. (Read more...)


How to Prevent and Detect Fraud


DECEMBER 2005: Mike Osborne, senior security manager for consumer goods company Kimberly-Clark, answers readers' questions on stopping financial fraud. (Read more...)


Audits That Keep Fraudsters Guessing


NOVEMBER 2005: Scratch the surface of many audit plans and you’ll find predictable elements that someone bent on fraud can anticipate and foil. That’s why SAS no. 99, Consideration of Fraud in a Financial Statement Audit, requires auditors to incorporate elements of unpredictability into their procedures. Here’s how. (Read more...)


Catching Fraudsters


NOVEMBER 2005: The top three executives for Timpview Mental Health Center (TMHC) were well-respected, church-going members of the community where they had lived all of their lives. They had wives and children and volunteered services to the church and to the community. However, the three executives had a dark side that was not known by their employer, families, or the community: they were common thieves who embezzled over $3.5 million from TMHC in a three year period. (Read more...)


Putting COSO’s Theory into Practice


The U.S. Sarbanes-Oxley Act of 2002 (SOX) requires management of public companies — both large and small — to annually assess and report on the effectiveness of internal control over financial reporting. Fortunately, businesses can rely on an industry standard, Internal Control — Integrated Framework, to assess and enhance their internal control systems. (Read more...)


The eyes have it: Seeing the signs of fraud


OCTOBER 2005: Would you recognize the clues that your client has been ripped off by one of its employees? Or would management conduct business as usual, blindly trusting their employees?


Companies make the mistake of not actively searching for fraud. They tend to trust their employees and trust the procedures in place to safeguard company assets.


It may be good business to trust employees and empower them to make real contributions to the growth of the company. However, it is not wise to turn a blind eye to signs that a trusted employee may be stealing.


An unexpected increase in affluence may signal an employee with sticky fingers. Favorite toys of fraudsters include new Harley Davidson motorcycles, luxury vehicles, and high-end watches. Those things are easy to spot, although management doesn’t always think through the implications. (Read more...)


Fraud prevention tool helps set ethical tone


OCTOBER 2005: In this new era of accountability, financial institutions are diligently working to develop and maintain aggressive fraud prevention programs. One crucial element of any effective program is the need to establish a confidential fraud hotline. Just how important is a hotline to an overall risk management program? Consider these statistics from the Association of Certified Fraud Examiners in its 2004 Report to the Nation:


* Organizations without fraud-reporting mechanisms suffered financial losses more than twice as high as those organizations with mechanisms in place,

* Forty percent of fraud cases included in the report were uncovered as a result of hotline tips. (Read more...)


When the hotline rings


A company with a fraud hotline can reduce its fraud losses by half, not to mention learn where it is most vulnerable to wrongdoing.


SEPTEMBER 2005: The news couldn’t have come at a worse time for the CEO of Superchairs Inc., a Canadian-based multinational manufacturer of expensive ergonomic office chairs (some details have been disguised for confidentiality). A few months earlier, Jake Mc-Kenna had convinced his board of directors to close down two plants in Western Canada and move production to its large facility in Malaysia. It was a bold decision, but one he felt would increase the company’s profits — until he was told of a phone call to Superchairs’ fraud hotline. (Read more...)


Detecting employee fraud


JUNE 2005: Employee fraud is on the increase despite awareness campaigns and risk management programmes and many companies are battling to understand where and how it happens. This article aims to assist organisations to define, understand and investigate employee fraud. (Read more...)


Catching Fraudsters with Their Hands in the Till - The Key to Fraud Detection


MAY 2005: Most ongoing frauds generate anomalies: transactions, ratios, records, or actions that are unusual or different from what one would normally expect. For example, the manager of a retail store locked his desk every time he left it, even when going to the bathroom. Such unusual behavior prompted the owner to use her extra key to open the manager’s desk, where she found thousands of dollars in invoices for sales that had not been rung into the cash register. When questioned about the invoices, the manager admitted to pocketing the proceeds from these sales. (Read more...)


A new era: using the internal audit to spot fraud


MAY 2005: Numerous headlines regarding recent litigation cases tell the tale: a strong internal audit group can be the most effective weapon for stopping fraud in its tracks.

An effective internal audit group can do everything from evaluating the substance of transactions and testing for compliance with GAAP and accounting and financial reporting procedures, to blowing the whistle on alleged financial statement fraud. (Read more...)


The Fraud Hotline: A Wise Investment


"Bill Blake" was terminated by his employer, a retail-grocery business, for unsatisfactory job performance evaluations. Finding himself out of a job and in need of money, Bill retaliated against his former employer by creating a fictitious vendor named "Tri-State Trucking." Having worked in accounts payable, Bill knew that his former employer did not have adequate controls over that area. Using an Excel spreadsheet, he created and submitted Tri-State Trucking invoices to his former employer for services never rendered.


Since most frauds are known to others, organizations must facilitate the transfer of this information from those who have it to those who need it. Such is the purpose of a fraud hotline. (Read more...


Detecting Occupational Fraud: Billing Schemes


APRIL 2005 - According to a 2004 report by the Association of Certified Fraud Examiners, organizations are estimated to lose 6% of their annual revenues to occupational fraud. Moreover, almost a quarter of all frauds are detected by accident (21.3%), as opposed to internal auditors (23.8%) or external auditors (10.9%). It is imperative that auditors, both internal and external, improve the effectiveness of their audits and detect a higher proportion of frauds. (Read more...)


To deter and detect fraud: The new corporate creed


Fraud costs Canadian businesses and their stakeholders millions of dollars every year. The true costs of fraud include not only the actual dollars lost, but also the significant costs related to internal investigations, dealing with regulatory or law enforcement agencies and, of course, the damage caused to the organization's reputation and credibility. We have all seen the chilling effects fraud can have on the markets — effects that extend far beyond the millions of dollars lost each year. (Read more...)


A panacea of the profession: is segregation of duties a useful control, or is it the snake oil of internal auditing?


APRIL 2005: RECENTLY, THE COMMITTEE of Sponsoring Organizations of the Treadway Commission (COSO) announced a new project, "Implementing the COSO Control Framework in Smaller Businesses," to address the widespread, mistaken belief that it is difficult for small companies with less ability to achieve segregation of duties to have effective internal control. There is not a shred of definitive proof in the audit literature that segregation of duties is generally effective or worth its often significant cost. In fact, the preponderance of evidence in my experience indicates that segregation of duties is the most over-rated and often least cost-effective control design option available. (Read more...)


A proactive approach to combating fraud: seven pre-emptive measures can help internal auditors deliver a first-round knockout to fraudulent activity


APRIL 2005: INTERNAL AUDIT PROFESSIONALS SHOULD PLAY AN integral role in their organization's fraud-fighting efforts. In fact, evidence shows that organizations fare better in terms of fraud when internal auditors are present. In its 2004 Report to the Nation, the Association of Certified Fraud Examiners states that the median loss for organizations with an internal audit department was $50,000 less than in organizations without an audit department. The report also indicates that fraud schemes were identified by internal audits at more than twice the rate of external audits, despite the fact that victim organizations in the study were more likely to have external audits. (Read more...)

Fraud Deterrence Strategic Plan (FDSP)


APRIL 2005: Some readers have contacted me asking how we put this strategic plan together as leading practice, which element is the most important as they would like to implement that one, or stating that their organisation has all the elements in place so they should therefore be fraud-free.


Well, firstly, these seven criteria for a ‘Best Practice’ fraud risk management program emerged as the benchmark of an effective anti-fraud compliance program because they are based on suggestions/requirements from the likes of the King II report on Corporate Governance, the Sarbanes Oxley Act, COSO (the Committee of Sponsoring Organisations of the Treadway Commission), the Australian Institute of Criminology, the ACFE (Association of Certified Fraud Examiners), the AICPA (American Institute of Certified Public Accountants) and the United States Sentencing Commission. (Read more...)

Temptation: what executives can do to protect themselves


MARCH 2005: Tips on what managers can do to avoid temptation. (Listen to audio)


Achilles' heel: management override of internal controls a weak link in fraud prevention


MARCH 2005: ControlCo.'s audit committee chair was stunned when the company's counsel informed him that the prior year's revenue and earnings may have been overstated.


"How could that happen?," the audit committee chair asks. "We have good internal controls and management, and the auditors both signed off that they were effective."


And that's when it became apparent: those who design and implement internal controls--management--also can override or bypass those controls. (Read more...)


Developing a Genuine Anti-Fraud Environment


MARCH 2005: The stream of corporate scandals and government investigations seems to continue without end. As the Enron, Global Crossing and WorldCom episodes graphically illustrate, such frauds, if left unaddressed, can have catastrophic results for a public company and create significant personal liability for individual directors and officers. Yet, despite the high stakes involved, board members and other corporate representatives have traditionally tended to view whistleblower complaints of fraud or government investigations as unexpected events, leaving them unprepared when a genuine crisis hits. (Read more...)


The fight against fraud: armed with a host of strategies and tools, organizations are waging war against the scourge of corporate fraud.


FEBRUARY 2005: FRAUD HAS LONG EXISTED AS A SORDID SWATH IN the fabric of business environments. Even after the fall of Enron and subsequent reform measures, fraud continues to pose a considerable threat to corporate well-being.


In response to ongoing risks, many organizations devote significant resources to preventing and detecting fraudulent activity. Internal auditing, of course, typically participates in that effort. But in many cases, the audit function is only part of the picture. Firms may have a dedicated fraud team that coordinates with internal auditing, or an overarching fraud organization in which auditing serves as one of several components. (Read more...)


Do you know the people you are hiring?


FEBRUARY 2005: "John Baker", a bookkeeper for a medium-sized mid-Western business, pled guilty to stealing $192,873 from his employer and was sentenced to four years’ probation and 100 hours of community service. Two months later, Mr. Baker was hired as a bookkeeper for a different business that had not independently verified his written denial of felony convictions on his job application. Not surprisingly, Mr. Baker, who earned about $35,000 annually, then embezzled $70,688 by forging his supervisor’s signatures on blank checks.


For every case that makes the Wall Street Journal (such as the ones summarized above), thousands go undetected until it is too late. Employment experts report they are seeing a virtual epidemic of phony credentials and false or inflated resumes among the thousands of workers seeking new jobs. (Read more...)


Hot Lines -  What’s it all about?


February 2005: Subscribers have been asking the questions, how can a help line, help me and who is the best provider of such a service for my organisation as well as how it might compare with an internally managed service?


This paper includes 5 articles from hot line service providers. (Read more...)



2005: CPAs are becoming more involved in the prevention, detection, and investigation of fraud. Whether in private industry or public practice or as governmental or quasi-governmental employees, CPAs are being called upon to perform proactive or reactive fraud-related services. (Read more...)


Read also in this article:

  • Categories of Fraud

  • Roles of the Fraud Litigation Practitioner

  • Prevention and Deterrence


20 Ways to Detect Fraud


2005: 1: Unusual Behaviour:


The perpetrator will often display unusual behaviour, that when taken as a whole is a strong indicator of fraud. The fraudster may not ever take a vacation or call in sick in fear of being caught. He or she may not assign out work even when overloaded. Other symptoms may be changes in behaviour such as increased drinking, smoking, defensiveness, and unusual irritability and suspiciousness. (Read more...)


To assess and detect


2005: Auditing standards rely on a three-step risk-based approach to fraud detection in which auditors must: properly identify fraud risk factors; assess fraud risk accordingly; and design specific auditing procedures aimed at minimizing the risk that material frauds are not detected. Academic research can be organized around these three steps. (Read more...)


Eight Tips to Prevent Employee Theft and Fraud


2005: One of the most serious threats to the success of a small business is employee theft. Misplaced trust, lax hiring and supervision, and a failure to implement basic financial controls can lead to an environment that is ripe for internal theft and fraud.


Small business owners can help protect their businesses from employee theft and fraud by following these eight recommendations. (Read more...)


SOX Section 404: Responding to an Adverse Report-A Checklist for the Audit Committee


2005: PURPOSE OF THIS TOOL: This tool is designed to educate the audit committee of a company that has received an adverse report on the effectiveness of its internal control over financial reporting. The first half educates the audit committee about the internal control evaluation requirements; the second half includes steps the audit committee should take if faced with this situation. (Read more...)



2005: Once management decides that it will commit fraud, the particular schemes used are usually determined by the nature of the business's operations. While we usually focus on the schemes and the financial results around those schemes, it is important to remember that the decision to commit fraud in the first place was management's or other officers'. The following chart summarizes the kinds of questions that must be asked about management and directors in examining fraud exposures. (Read more...)




The Fraud Diamond: Considering the Four Elements of Fraud


DECEMBER 2004: Despite intense efforts to stamp out corruption, misappropriation of assets, and fraudulent financial reporting, it appears that fraud in its various forms is a problem that is increasing in frequency and severity.


The authors believe that the fraud triangle could be enhanced to improve both fraud prevention and detection by considering a fourth element. In addition to addressing incentive, opportunity, and rationalization, the authors’ four-sided “fraud diamond” also considers an individual’s capability: personal traits and abilities that play a major role in whether fraud may actually occur even with the presence of the other three elements. (Read more...)


Cash: The Favourite Target of Fraudsters


NOVEMBER 2004: Cash is the lifeblood of any organization. All organizations have cash flowing both in and out. Research indicates that about 92% of all asset-theft fraud schemes involve cash, with median losses of $65,000 per incident. About 66% of cash schemes involve outgoing cash (disbursements) and 34% involve incoming cash (receipts). (Read more...)


Caution: fraud overhead: overhead accounts are a breeding ground for fraud


OCTOBER 2004: A closely held manufacturing company with 100 employees and more than $30 million in revenues that we'll call "Wapello Manufacturing, Inc.," was having unusually high monthly overhead variances. The CEO hired an outside consulting accountant to investigate the problem, which resulted in the arrest of the company's controller for embezzling nearly $1 million from the company over three years.


The forensic accountant/consultant investigated Wapello's accounting records, including the executive payroll, and discovered that the controller had been fraudulently issuing additional paychecks to himself. In addition to the payroll discrepancies, the consultant discovered that the controller had destroyed many of the accounting records from prior years. There were missing purchase invoices, which made it necessary for the consultant and Wapello people to reconstruct the payables accounts, especially the company's freight bills.


The consultant also found that the controller was embezzling money through the loans payable account. All the fraudulent transactions were charged to the manufacturing overhead account, mainly as fictitious tool purchases. (Read more...)


Fraud precautions start with better awareness by companies


OCTOBER 2004: Despite new corporate-governance regulations, the threat of fraud remains a significant hazard that could ruin a company's finances, damage its brand and reputation, and send it into a death spiral of government investigations, loss of market cap and bankruptcy.


Reported fraud remains on the rise according to a recent survey by KPMG LLP of more than 450 companies, and from state and federal government agencies. While reported fraud is increasing, the survey also indicated that organizations have countered with new detection and prevention measures. (Read more...)


Safeguard Against Internal Theft


SEPTEMBER 2004: Do you have controls in place to protect your organization from theft and fraud? Many privately-owned businesses, insurance brokers being no exception, are tending to concentrate the performance of operating and custodial accounting responsibilities among fewer staff, increasing their exposure to the potential misappropriation of assets, primarily cash.


For insurance brokers, misappropriation typically occurs in the form of employee theft of receipts, often hidden through the manipulation of premium receivable balances, known as "lapping," and third-party theft of disbursements through cheque fraud. (Read more...)


Fraud Prevention and Detection Audit Work Program


SEPTEMBER 2004: This program can be used by internal auditors as an evaluation tool or converted into a questionnaire for use with management to better understand current prevention and detection program activities.

This template can be customized into self-assessment style questionnaires as well.

Some additional considerations include:

  • To what extend has the entity implemented measures at the process level designed to prevent, deter and detect significant fraud risks?

  • Senior members of management who are able to override process-level controls based on authority levels are often involved in the largest frauds. Thus, detecting and preventing major frauds requires creating a work place or environment promoting ethical behavior and a responsible workforce. These anti-fraud environments encourage all employees to report possible issues through a culture of “doing the right thing.”

  • Development of a proactive process to detect, investigate, and resolve possible fraud schemes. These activities can be stimulated through fraud risk analysis and other indicators through the normal course of transaction processing.

(Read more...)


Yes, Auditors Can Stop Fraud


AUGUST 2004: AS 99, Sarbanes-Oxley and a host of other proposed new audit standards aimed at detecting financial statement fraud and other unethical or unlawful activity, have greatly increased the work load for auditors in all industries.


Unfortunate: The new pronouncements fall short of providing auditors with specific and practical tools needed for foiling corporate fraud… (Read more...)


Bite into fraud: Simple ingredients make a palatable prevention recipe


Companies large and small face the threat of theft by an employee.


"It is prevalent, and it's a real problem," said Larry Cook, an investigator with Clarence M. Kelley and Associates Inc. in Kansas City. "A majority of businesses are just not prepared to deal with it."


Dealing with fraud is complex and requires:

  • Prevention through internal controls on money and other assets.

  • Detection strategies, particularly through anonymous reporting.

  • Recovery plans for reclaiming stolen money.

  • Legal strategies, such as firing, suing and pressing criminal charges.

(Read more...)


Fraud Preventions: The Latest Techniques

Developing a Strategy to Fight Fraud


JULY 2004: Does your organization have a strategy to fight fraud? It's not enough just to detect and investigate fraud, but a well-rounded anti-fraud program will also have taken measures that will prevent fraud. Once this is implemented, everything else will fall into place. Learn how you can develop strategies that will work for you.


One of the biggest challenges for the fraud examiner is to persuade management that the risks of fraud cannot be underestimated. Those who have not suffered from fraud previously will be unaware of the risks and costs. Management may simply think in terms of the direct financial costs but need to be encouraged to look further. (Read more...)


More Board Independence, Less Fraud?

JUNE 2004: The more independent directors on a company's board, the less likely it is to be accused of fraud, according to a study published in the June issue of Financial Analysts Journal, a publication of the CFA Institute. (Read more...)


10 truths you need to know about fraud


MAY 2004: You've undoubtedly heard about the recent corporate accounting scandals, but how much do you really know about fraud? Ignorance is not bliss when it comes to fraud because, like high blood pressure, it can be a silent killer of your company's financial health. We will look at 10 truths you should know about fraud to help reduce the risks of it occurring within your business. (Read more...)


Fraud and the Role of the Audit Committee


MAY 2004: Most companies have probably experienced some level of fraud at one time or another, even if it was not material and did not involve senior management.

This special edition of the Audit Committee Brief addresses increased responsibilities and approaches that audit committee members might consider with respect to fraud.

Fraud has always represented a business risk for organizations. The threat of fraud led to the enactment of legislation and regulations such as the Foreign Corrupt Practices Act and the Federal Deposit Insurance Corporation Improvement Act. High-profile accounting scandals renewed the focus on financial reporting fraud, resulting in comprehensive legislation and subsequent Securities and Exchange Commission (SEC) rulemaking concerning corporate governance and internal controls. (Read more...)


The payroll payoff


Beware of your vulnerability to fraud by lax controls over your payroll systems


MAY 2004: What Adele Sharpe was a compulsive gambler, and she hid it well. Her problem began innocently at work when one day a casino website popped up on her computer as she surfed the Internet during lunch. She placed a few bets using the free credits offered by the site to entice first-time players. She won, and that gave her a thrilling feeling, she would later explain to fraud investigators.


Two years later, as the payroll manager of a medium-sized manufacturing firm near Winnipeg, Sharpe found herself accused of defrauding her employer of $750,000.


Why did she do it? To pay off her gambling losses, an average of $7,000 a week. How did she do it? By taking advantage of a lack of proper controls in her company's payroll department.


There was nothing cunning about Sharpe's scheme. She simply exploited a system that functioned on the assumption that, like most payroll managers, she was trustworthy. Until she developed a taste for gambling, that had been true. (Read more...)


The fight against fraud: a look at best practices used in the effort to defeat corporate fraud


APRIL 2004: LISTENING TO NEWS OF THE ABUNDANCE OF FRAUDS occurring throughout the world may make it difficult for auditors to believe that there is any cause for hope; however, interviews with several high-level audit and finance professionals, as well as instructors, elicited responses that paint a surprisingly bright picture of the fight against fraud. Most of those interviewed attribute many of the increases in reported fraud to better detection and reporting, rather than an actual increase in incidences. In fact, data reported in KPMG's Fraud Survey 2003 indicates that, in some areas, the actual number of fraud occurrences may be decreasing. (Read more...)


An environment for fraud: with jail not yet a distant memory, Walter Pavlo recounts the decisions that led him to hide MCI's bad-debt expenses and embezzle millions


APRIL 2004: In 1997--before MCI was acquired by WorldCom--Walter Pavlo, a former MCI billings manager, was sentenced to 41 months in federal prison for wire fraud and money laundering. Over a six-month period in 1996, Pavlo and two associates defrauded MCI customers out of approximately US $6 million. In addition, at the direction of his supervisors, Pavlo helped manipulate the telecom company's accounting records to hide bad-debt expenses totaling US $180 million. The road he traveled to get to this point should be a stark reminder to internal auditors about the benefits of controls and a lesson to anyone who doubts the necessity of those controls or the potential for committing fraud that's within everyone. (Read more...)


Designing a Robust Fraud Prevention Program - Part Two

MARCH 2004: Obviously, a poor working environment provides a motive and rationalization to commit fraud. Here's a quick health check: does management appear not to care about their employees? Does it have unreasonable expectations or financial targets? Is the organization autocratic or participative? Is there a lack of training or promotion opportunities? Does management say one thing but do another? Are senior executives treated differently than rank and file employees when it comes to discipline? (Read more...)


New Approaches to Fraud Deterrence


FEBRUARY 2004: Call me a skeptic. Maybe it’s because I’ve investigated a couple of thousand fraud cases over a career now entering its fourth decade. Perhaps it’s because questioning is one of a CPA’s most valuable talents. While I believe that as a profession we’re moving in the right direction, I’m convinced we still have miles to go. The auditing profession’s current approach to fraud detection—as well-intended as it is—won’t have the impact the public expects until auditors and their firms are willing to invest in improved fraud deterrence and detection skills and resources. (Read more...)


Corporate fraud - detection and control


FEBRUARY 2004: The detection and prevention of fraud are significant challenges facing the business environment today and in years to come. The way in which business deals with fraud may either enhance or undermine its corporate reputation.


Today I will look at the factors that can give rise to fraud and focus on the role corporate governance plays in addressing each of them. I will discuss effective corporate governance as a preventative strategy and explain how it provides organisations with an additional layer of business oversight, which is formalised through processes and given teeth through the commitment of the board and management. (Read more...)


Catch the Warning Signs of Fraud in NPO's


JANUARY 2004: With their high fund-raising and performance goals and with volunteers often handling money and keeping accounting records, nonprofit organizations can be prime targets for fraud. Here are some of the red flags CPAs can advise NPO employers and clients to watch for: (Read more...)


Designing a Robust Fraud Prevention Program - Part One

JANUARY 2004: Many high-profile corporations have learned the hard way about the devastating effects of fraud. Enron, WorldCom, and Tyco – among many corporations – all had security departments but they couldn't do anything to protect employees and shareholders from executives determined to loot their own companies.


All entities – including yours – need robust fraud prevention programs staffed with savvy and cunning fraud examiners. The ideal program will protect a company from itself by: (Read more...)



Expanding Role of the Audit Committee


2004: This series of articles examines the role of the contemporary Audit Committee inside the organization, including its oversight responsibility for ensuring the company’s financial reports are accurate and its internal controls are as strong as possible, in an effort to prevent theft and fraud. The introductory and concluding articles are by Stephen Spector. Originally published in 2004. (Read more...)


Tone at the Top: Value Added Auditing for Leadership


2004: An integral, strategic approach to auditing is growing out of some important trends; among these, recent calls for reform in corporate finance and governance, new requirements of global enterprise, and the evolution of quality standards, frameworks for risk management, and criteria for “organizational excellence.” Synthesizing theories and practice of quality management, audit, and organizational development, this approach offers internal auditors important opportunities for enhanced careers, thought leadership, and service in improving strategic management and ethics. This integral approach to auditing (financial, quality, and other standards) acknowledges that values embodied in models of assurance affect “tone at the top.”


Fraudulent practices by self-serving CEOs and other corporate officers –abetted by disengaged, complicit, or incompetent boards of directors--have caused massive losses to investors and employees, the collapse of large companies and low public confidence in the integrity of corporate governance. In response, Congress (in Sarbanes-Oxley of 2002), the SEC, and attorneys-general have acted swiftly to strengthen regulations and prosecute offenders. Other bodies have revised or created frameworks for addressing risk management and for reviewing board composition, competence and responsibilities—including setting CEO compensation. At the same time, social and environmental concerns have led international organizations to draw guidelines for global enterprises. Stakeholders want assurance of integrity in the governance, finance, and operations of corporations. They are demanding ever higher standards of corporate citizenship, beginning with accountability at the top. (Read more...)


2004: This checklist is a general guide for CPAs designed to help assess and manage the risk of fraud. It has been updated to encompass the guidance contained in Statement on Auditing Standards No. 99, Consideration of Fraud in a Financial Statement Audit. (Read more...)


Fraud and the Responsibilities of the Audit Committee


An audit committee should take an active role in the prevention and deterrence of fraud, as well as an effective ethics and compliance program. The audit committee should constantly challenge management and the auditors to ensure that the entity has appropriate antifraud programs and controls in place to identify potential fraud and ensuring that investigations are undertaken if fraud is detected. The audit committee should take an interest in ensuring that appropriate action is taken against known perpetrators of fraud.


This tool is intended to make audit committee members aware of their responsibilities as they undertake this important role. This tool highlights areas of corporate activity that may require additional scrutiny by the audit committee. (Read more...)



The Fraud Investigator fighting fraud through prevention, detection and deterence