Procedure fraud audit is one of the important checks to ensure a company is protected from fraudulent actions that have a bad impact on the company.
Fraud that is not handled immediately will result in the company or organization suffered financial losses and tarnished his good name.
To better understand what fraud audit, type fraud on Business, and some other info about fraud checks, please listen to the explanation of the following article!
What is audit Fraud?
Fraud an audit is an examination carried out to detect and prevent fraud in a company's financial transactions.
Fraud is part of investigative audit which is combined with forensic investigations to detect fraud that occurs.
Fraud itself is a fraud on financial statements that is deliberately carried out to reduce, eliminate, or add a certain amount to deceive the owner of the financial statements.
However, this is certainly clearly different from a financial audit that allows the auditor to provide an independent opinion, where the assessment is carried out objectively, based on audit standards, and without being influenced by any management.
While fraud auditing enables auditors to prevent, detect, and conduct investigations on fraudulent business transactions to determine the outcome.
Therefore, an auditor to fraud audit not only need to have skilled audit skills, but also skills as criminal investigator.
Read Also: Get To Know The Types Of Audits Based On Their Purpose & Scope!
Types Of Fraud
Among the types fraud that can happen to a company or business and needs to be done fraud the audit is as follows:
1. Corruption
It is a type of fraud in the form of extortion, bribery, and misuse of information aimed at personal interests.
Corruption is usually done by way of gratification or giving gifts/ facilities to a figure who has a higher position and is still related to his position for long-term benefits.
2. Theft and embezzlement of money
This is a type of fraud related to white collar crime or crimes committed by high-ranking individuals or groups, whether in business or government.
Money laundering and embezzlement this is usually done by abusing or embezzling the assets of investors entrusted to the perpetrators, as in Ponzi scheme in multi-level marketing.
3. Data Theft
It is a fraud that occurs in the realm of Technology, where perpetrators will attack computer systems to steal important company data for personal interests.
Generally, the perpetrator will sell, manipulate, or use that privacy information for bad interests.
Computer fraud not only harm the company, but also Society at large. This is because ordinary corporate data includes people's identities, such as credit card numbers.
4. Asset Deviation
Is fraud what usually happens in an institution, where someone misuses the assets that have been entrusted to him.
Although it occurs quite often, deviations from this asset are easily detected due to the presence of fraud internal audit and external audit routinely, accounting standard recording system, and good financial management.
Read Also: Complete Guide to the stages of Internal and external Audit
Konsep Triangle Fraud Audit
Basically, the process of collecting evidence fraud the audit will focus on the fact whether fraud it does happen. If it really happened, then auditor. will begin to gather some other evidence, such as:
- Find and prove who is the culprit
- How fraud happened
- Where fraud happened
- When is the time fraud
- What laws are violated from fraud
- How much loss results from fraud
- Who is harmed and benefited
To check how fraud can occur, then developed the theory triangle fraud audits that have the potential to reveal the occurrence fraud such.
Fraud triangle audit consists of three aspects that affect actors fraud in committing a fraud or fraud.
The following is an explanation of three conceptual frameworks for understanding action fraud what the perpetrators did with fraud audit:
1. Pressure (Pressure)
In this aspect, the actors do fraud because there is pressure and pressure to do it.
Fraud the result of this pressure can occur due to job demands that pressure him to achieve company targets or personal problems such as being in debt.
Some of these pressures will affect the actors to take action fraud in a company or business.
2. Opportunities (Opportunity)
In this case, the perpetrator will take action fraud because there is an opportunity to do so.
Such as the loopholes in the weak SOP supervision system, changes in the work environment, and corporate culture that does not comply with ethics properly.
An employee who finds a loophole in the supervision system or when they experience an injustice that makes them work two jobs at once will have a chance at occurrence fraud.
3. Justification (Rationalization)
At the point of justification, the offender will give any reason to justify fraud which is done.
The goal itself is for action fraud it can be understood, understood, and forgiven. This usually happens because the perpetrator feels that he is not treated fairly by the company.
Such as, employees who do not get a salary in accordance with their work or embezzlement of funds on the grounds that they want to give bonuses to subordinates.
How to detect fraud with Fraud Audit?
Basically, fraud audits that are part of investigative audits, fraud will be identified by several things, one of which triangle fraud audit.
In addition to fraud triangle, You can also identify risks fraud audit by reviewing the internal control structure, evaluating the work environment, and using fraud risk assessment.
One technique that can be used by an auditor to detect fraud is to analytical prosedur.
An analytical procedure is a method of comparing a company's financial statements with trends, ratios, or reasonable estimates.
It is done to review the possibility of fluctuations or unusual patterns that are indicative of action fraud.
This method is an important approach that allows auditors to identify areas in financial data that have undergone changes due to fraud.
Read Also: Audit Process: Definition, stages, and Success Tips
How to prevent fraud with Audit Fraud?
The Prevention that can be done before the occurrence of fraud is the best strategy.
Here are some strategies companies need to take to prevent fraud:
- Build a strong internal control system
- Conduct regular training and awareness programs on employees
- Real-time transaction monitoring with advanced technology
- Perform data analysis to identify unusual patterns to flag fraud risks
- Building an ethical culture within the company
Conclusion
Thus is the explanation of audit fraud in its role to maintain the integrity of the business or company.
Therefore, it is necessary to conduct internal and external audits to identify any discrepancies in the financial statements.
Your company can rely on Audithink to facilitate the audit process carried out by the audit team.
With this application, you can plan, perform task management, fill out audit papers, report audit results, and monitor the implementation of the plan.
Very effective and efficient isn't it? Let's go soon schedule a demo apps on Audithink!
