Accounting News

Thursday, November 10, 2011
Is It Getting Harder to Find Fraud?

Every public company must issue financial statements. This makes the market more efficient by allowing investors to make informed decisions. So a tremendous amount of capital relies on accurate reports. A CPA firm is charged with auditing the financials for accuracy. Forbes posed the question of whether the job is getting harder.

On potential place of fraud is fake invoices. This would show false revenue on the balance sheet. Through a process called confirmation the CPA is charged with checking that the product or service was performed, the invoice is accurate, and the check cleared the bank. It is impossible to check every vendor so they do a sample.

The problem is that the internet makes it easier to set up bogus companies. For very little money a website can be set up and a call forwarded to a call center. The CPA is unlikely to detect that it is just fraud. Which gets back to the old problem, auditors can only do so much when the the management is out to lie to them.

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