Incorporating Fraud Detection into Every Audit

You can find a news article about fraud literally every day. If fraud is so rampant, shouldn’t auditors actually find fraudulent activity more often? The answer is a resounding YES, we should!  The reason we don’t find fraud more frequently is usually a lack of training. To do a better job at fraud detection, we need to train auditors in technical and soft skills.

Technical Skills

Using data analytics is the single most effective technical skill for fraud detection. Unfortunately, too many auditors think data analytics is beyond them. Today, there are simple to use analytic tools and Excel addins to make it easier than ever before. If you’ve never use analytics before, the simplest test to start with is Benford’s Law. Using this test on large data sets, like expenses, is a quick way to look for abnormal patterns. You can also use the tools for transactions processed on weekends, off hours, and holidays when people are not typically working.

Soft Skills

Even more effective than analytics is the power of conversation. Having open conversation with the people you are auditing can point you in the direction where fraud could happen. You just need to listen actively. By improving your listening skills and always keeping red flags in mind, simple conversation can consistently uncover fraud.