Audits Don’t Often Find Fraud – Fraud Files Blog

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