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