Fraud Auditing

Who will benefit from this course?

This course will advance participants’ understanding of identifying fraud through an audit risk assessment. This course is designed for internal auditors with a basic understanding of fraud, who would like to dive deeper into assessing fraud risk at the engagement level.  This course is also for those who have been involved in internal audit engagements that require an understanding of how to manage organizational risk related to fraud.

Course Objectives

• Explain the various roles and responsible for preventing, detecting, assessing, and investigating fraud at the organizational level
• Recognize the benefits of utilizing a fraud risk management framework.
• Discuss and apply fraud risk management techniques to mitigating organizational fraud.
• Identify the most prevalent fraud schemes perpetrated across organizations.
• Determine how to mitigate fraud within an organization via appropriately designed internal controls.
• Examine sources of fraud typically identified during an audit engagement.
• Explore techniques to enhance the assessment of fraud risk at the engagement level.
• Discover innovative ways to identify potential fraud risks.

Course Topics

Fraud Overview: Preventing, Detecting, Assessing and Investigating

• Introduction to fraud and fraud auditing.
• The IIA’s Three Lines Model and fraud auditing roles.

Fraud Types

• Sources of fraud typically identified during an audit engagement, including:
  • Fictitious personnel expenses: inappropriate card expenses, duplicate expense reports, fictitious expenses for services not rendered.
  • Fraudulent disbursements: fictitious vendors, false refunds.
  • Concealed liabilities and expenses: bad debt omitted, capitalized expenses.
  • Related party transaction: benefit from inside connection, etc.
  • Embezzlement: personal expenses characterized as work expenses and falsified records to substantiate.

Understand Common Sources of Fraud

• Pressure or Incentive: Actual or perceived need that provides a reason or motive.
• Opportunity: Combination of circumstances or conditions that enable fraud to occur.
• Rationalization: Concocted, convincing, and plausible justification.

Fraud Risk Management Frameworks

• COSO Fraud Risk Management Guidelines.
• GAO Fraud Risk Management Framework.
• OCC Bulletin 2019-37.
• AICPA Fraud Risk Frameworks.

Fraud Risk Management

• Creating a fraud risk management framework.
• Enhancing fraud risk management.

Fraud Related Activities for Auditors: High-Risk Areas for Fraud

• Advance Fee Scheme.
• Inventories.
• Payroll.
• Purchasing.
• Retail Operations.
• Web-based Fraud.

Assess Fraud Risk at the Engagement Level

• Gathering information.
• Prior assessments and investigations.
• Formal reporting mechanisms and interviews.

Identify Potential Fraud Risks

• Lack of management area expertise.
• Lack of management supervision.
• History of personnel legal violations.
• Lack of personnel background checks.
• Dissatisfied employees.
• Unwillingness to share process duties.
• Duties not segregated.
• Poor physical security.
• Poor access controls.

Mitigating Fraud Within an Organization: Reducing Organizational Risk

• Fraud Policy.
• Compliance Program to Reduce Organizational Risk.
• Fraud Deterrence - Audit Considerations.
• Auditing for Fraud: Tips & Techniques.