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Controls

Fraud detection

A common misbelieve 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 (whistleblowing).

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.

– Accounting difficulties.

– Whistleblowers.

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