21 Nov

Why Audits Don’t Find Fraud

This video is a little longer than usual. Tracy Coenen talks about the reasons why traditional financial statement audits don’t find fraud. It is very rare for fraud to be uncovered during the year-end audit, but stakeholders often rely on audits to do just that.

Tracy walks through these 9 common reasons why audits are not effective at detecting the fraud. Watch the video for the details of each.

  • Reliance on internal controls
  • Doing predictable audit tests
  • Using sampling of transactions
  • Employees working around scope and materiality
  • Inexperienced auditors
  • Dynamic business environment
  • Inadequate follow-up by auditors
  • Looking for a needle in a haystack
  • Use of estimates by management

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