Why don't auditors find fraud?

Organizations continue to be at risk because their auditors and accountants often don’t know about, or continuously look for, fraud red flags. And they don’t apply additional audit procedures to offer reasonable assurance that financial statements are free of misstatements due to fraud. Let’s help them and engage everybody in this good fight.

In “Alice’s Adventures in Wonderland,” Alice asks the Cat:

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where —” said Alice.

“Then it doesn’t matter which way you go,” said the Cat.

The story illustrates a very important point for everyone: We have to know where we’re going to get anywhere. As fraud examiners, we certainly face that issue. We must know where we’re going when we begin a fraud examination. To help us, we have the Fraud Examiners Manual (FEM) to guide the examination and, as we’ve been trained, we follow the “fraud theory”:

(See “Fraud Examination Methodology” in the online FEM.)