Many organizations look to auditors as their primary source of fraud detection. That’s a mistake according to the Association of Certified Fraud Examiners (ACFE). In 2018, an ACFE study found 53 percent of occupational fraud is identified by employees other than auditors. That’s compared to just 15 percent detected by internal auditors and just 4 percent by external auditors.
Those numbers may surprise some people, but they shouldn’t. Auditors aren’t in the business of uncovering fraud. Instead, they play a key role in determining the accuracy of financials and may only uncover potential fraud as part of that review process. Many instances of fraud are perpetrated “off the books,” and outside of an auditor’s field of vision.
Risk management professionals, on the contrary, are skilled and trained in preventing, finding and resolving fraud and other misconduct. They seek and find outside information in conjunction with internal data.
Many schemes can only be discovered through alternative methods like outside investigations. Vendors might be charging several times the market rate as part of a kick-back scheme. An outside market review and interviews with third-parties could help uncover this instance of fraud.
To learn more about why your organization should be looking to its risk management professionals versus auditors as its primary source of fraud detection, consider reading the FCPA Blog “The Risks of Relying on Auditors to Find Fraud.”