Dan's Internal Audit Corner
Auditing for Fraud “Thought Leadership”
- (Because bad things are happening).
Each month Dan Swanson, a senior security and internal audit professional will provide his list of recommended resources for AuditNet readers. If you have questions about this page or the links, you can reach Dan at www.securitybenchmark.com and dswanson_2005@yahoo.com.
The function of education is to teach one to think intensively and to think critically... Intelligence plus character – that is the goal of true education.
— Martin Luther King Jr.
We need to address fraud in all its many forms !!!
Some companies have significantly lower levels of misappropriation of assets and are less susceptible to fraudulent financial reporting than others. Why? Because they aggressively take steps to prevent and detect fraud, end of story (it’s that simple). At these exemplary companies, management is responsible for designing and implementing systems and procedures for the prevention and detection of fraud—and, along with the board of directors, for ensuring a culture and environment that promotes honesty and ethical behavior.
Some key questions to ponder:
- Does your organization have a formal and robust anti-fraud program?
- Does management evaluate the anti-fraud controls regularly?
- Have you investigated the risk of management override?
- Have you taken steps to reduce that risk?
- Does your organization have a strong oversight process?
- Would you say your organization has a strong ethical culture?
Be Diligent
An open discussion among the key stakeholders, and ideally prior to any front page news, is always recommended. Setting clear expectations with everyone involved (regarding your antifraud efforts) is half the battle. Being diligent in your efforts is the other half. To truly fight fraud, we need a firm policy, it must be enforced, and violators must be investigated and action taken. Leading resources to assist in your fight against crime are provided below.
Fraud risk management is here to stay—has your organization implemented an effective strategy for fraud prevention, detection, and response? At the end of the day, are you part of the problem or part of the solution?
Have another great month.
Dan Swanson
Key Resources
Management Antifraud Programs and Controls: Guidance to Help Prevent and Deter Fraud
Management Override of Internal Control: The Achilles’ Heel of Fraud Prevention
“Report to the Nation" – (A comprehensive report that sheds light on occupational fraud and abuse while offering stark lessons and valuable insight about its prevention and detection). -
Leading Resources
AICPA’s Antifraud & Corporate Responsibility Center
IIA's Fraud resource repository
The Association of Certified Fraud Examiners
ACFE’s Fraud resource repository
OCEG Internal Audit Guide – Guidance for the Evaluation of a Compliance and Ethics Program
Fraud Risk Management: Developing a Strategy for Prevention, Detection, and Response
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