Fraud deterrence (#34)

In this episode we discuss the issues relating to fraud deterrence, to keep instances of fraud from ever happening. Key points made in the podcast are:

  • Fraud deterrence involves conditions and procedures analysis to keep fraud from taking place.

  • Could include the use of detection systems to spot fraud before it worsens.

  • The cost of fraud deterrence is a fraction of the cost of the fraud being prevented.

  • It avoids the loss of business reputation by a business, which might otherwise impact its contracts and loans.

  • A robust, bottom-up budget is a good fraud deterrence control.

  • Just the act of reviewing accounts is a deterrent, since employees see that you are looking over their shoulders.

  • The worst frauds tend to go on for an extremely long time, building in size as they get older.

  • It is rare to see an excessive level of control in a business.

  • Focus on all aspects of the business when engaged in fraud deterrence.

  • Conduct an operational review to identify control issues and also increase the efficiency level. Requires lots of interviews.

  • Difficult to do an in-house fraud deterrence review, due to the fear of recrimination.

  • Should do deterrence reviews about every two to three years.

Related Courses

Accounting Controls Guidebook
Fraud Examination
Fraud Schemes