CIMA BA4 Syllabus B. CORPORATE GOVERNANCE - Fraud detection - Notes ^{5 / 6}

Fraud detection

A common misbelief is that external auditors find fraud. 

This is actually rarely the case. 

Their letters of engagement typically state that it is not their responsibility to look for fraud.

Most frauds are discovered accidentally, or as a result of information received (whistle blowing).

Some methods of discovering fraud are:

• Performing regular checks

  – For example stocktaking and cash counts.

• Warning signals

  For example:

  – Failures in internal control procedures.

  – Lack of information provided to auditors.

  – Unusual behaviour by individual staff members.

  – Whistleblowers.