Collective Action in the Fight Against Fraud
Strong fraud deterrence and detection requires all participants in the financial reporting ecosystem to exercise extreme vigilance. In a heightened risk environment regulators, internal and external auditors, audit committees, and public company management must work together to effectively detect and deter fraud.
The tools we use to fight fraud have strengthened significantly over the past 20 years in the United States.
Increased financial reporting regulation in the United States through the Sarbanes-Oxley Act.
Public company audit firms have made investments in human capital and technology that contribute to better fraud deterrence and detection.
New techniques utilizing automation, machine learning and remote-work technology enable auditors to review more information, more frequently, in the fight against fraud.
The COVID-19 pandemic has caused unprecedented disruption to our financial reporting systems, creating new challenges that heighten the risk of fraud at public companies. Many employees and management have had to transition to remote work while experiencing unexpected challenges. These pressures could encourage otherwise honest employees or executives to commit fraud.
Auditors are leveraging data and technology to fulfill their responsibility under US auditing standards to obtain “reasonable assurance” about whether public company financial statements are free of material misstatement. The profession is prepared to do even more to deter and detect fraud if an audit committee determines there is a heightened fraud risk at their company.
Explore our anti-fraud resources:
Anti-fraud in Action: The Fraud Risk Landscape of COVID-19
The CAQ’s Julie Bell Lindsay, Executive Director, interviews Grant Thornton's CEO, Brad Preber, to explore the impact of COVID-19 on fraud. Watch this webisode to learn about emerging fraud and cyber risks, the CAREs Act, different types of fraud schemes, and how members of the financial reporting supply chain each have a responsibility in mitigating fraud risk.