Fraud is a threat to every organization and can cost millions of dollars. As an auditor, we have to constantly be on the lookout for it. Every major audit standard has some kind of fraud provisions that auditors are required to follow. You can’t get around it. It starts with the planning process and carries throughout the audit engagement. Every auditor should be familiar with the key fraud red flags and the major fraud schemes.

Every internal auditor is required to look for indicators of fraud in every audit engagement. Every major audit association has a standard that speaks to fraud and how the auditor should handle it. That means that the auditor should be aware of the various audit schemes and what to look for.

Learning Objectives:

• Define audit standards relative to fraud


• Identify the factors that lead to fraud


• List the three major fraud schemes and the key subschemes


• Determine audit tests for various fraud schemes


• Report on key survey information on fraud including the likely persons to commit fraud, the areas where frauds are committed, the likely schemes used, and the red flags to look out for