Fraud Magazine article on brainstorming to find how someone could defraud a company:
When the big frauds hit, it doesn’t take long for others to ask “where were the auditors?” In this instance, the NCUSIF inspector general noted that “numerous red flags were present for many years,” including those spotted by examiners. The IG stated that examiners only performed “their required minimum procedures.” Board meeting minutes indicate that the audit reports identified no outstanding issues about the credit union operations.
The question beckons: Did the auditors properly prepare and plan to find fraud? Could effective fraud brainstorming have helped uncover these schemes much sooner?
“If you don’t know what you’re looking for, how will you know when you’ve found it?”
This sums up the advantage of thinking about fraud before conducting an audit. An audit plan that’s not designed to find fraud may occasionally by chance find it. However, the fraud detection business shouldn’t be built on luck or hope but on proactive, planned and decisive measures.
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