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6 Tips to Help Auditors Uncover Fraud

Sep 24th 2018
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Insider fraud detection by an auditor is at an all-time low; currently, only 15 percent is uncovered by an internal audit.  The audit professional is now up against the ropes, as technology has played a significant role in how these occupational frauds are committed. Therefore, auditors must shift their mindset to create a significant increase in that figure. 

Here are some tips to help the auditing profession change and improve the detection of fraud within companies:

Tip #1:  Rotate Interviewers

Internal auditors naturally form relationships with those employees they work with in an ongoing manner. Those relationships may contribute to the challenge when bias comes to the forefront. Verification has become more and more important as the relationships are formed.

Tip #2:  Embrace Technology 

Auditors can maximize the growing ability of Artificial Intelligence (AI) to assist in detecting areas of concern, performing analytics more efficiently and cost effectively and so much more. The future of the auditing profession will change drastically with these tools. Technology should allow you to focus on more important areas, such as verbal and nonverbal communication, when performing interviews of relevant employees.

Tip #3:  Engage in Relevant Continuing Education 

Technology is moving so quickly that it has resulted in changes to auditing standards. It is more important than ever for auditors to commit to ongoing and timely education, not just the “required CPE required by the state boards.” Internal auditing strategies need to be updated and revisited on a much more frequent basis than in the past. The need for research will require companies and firms to rely on AI to keep them up to date. 

Tip #4:  Keep an IT Auditor on Staff

As mentioned above, the growth in technology for all businesses has increased the need for IT auditors. Individuals who did not used to be highly technical must now understand how to use various programs. It is important to have a specialist on your team.  

Tip #5:  Schedule Interviews in Real Time 

Interestingly, audits focus on the past and are rarely performed on an ongoing basis. On average, insider frauds take many months or years to detect. As an internal auditor, you may want to start strategically changing the way you perform testing and interviews. Develop a plan to perform interviews at unannounced times. Obviously, you will want to announce that there will be an increase in real-time informational interviews and testing (including IT audit testing) but that they will be “surprise” interviews.

Tip #6:  Monitor Social Media 

Prior to performing an informational interview with a staff member, research the interviewee on social media sites, such as LinkedIn and Facebook. Knowing information ahead of time about your interviewee will assist you in assessing their mannerisms during the meeting. This doesn’t infer that you will be spying on the staff in an ongoing basis, but a periodic social media check may be a great way to monitor lifestyles.

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