Educate Your Clients About Fraud

Source: Accounting Today

This article explains how the need for fraud detection provides a valuable service opportunity for CPA firms. According to the Association of Certified Fraud Examiners' annual Report to the Nations, approximately five percent of business revenues worldwide are lost to fraud. But most business owners don't recognize the risk. CPAs should educate their clients about the potential for fraud. In particular, they should make sure clients understand that external audits are not designed to uncover fraud, so they shouldn't rely on them. Measures to detect fraud earlier need to come from within the organization.

Too often, clients take a reactive approach to fraud – involving a forensic accountant after the fact to quantify the fraud and attempt to recover lost funds. A far more effective approach is a proactive one: Bringing in a forensic accountant to evaluate an organization's internal systems and controls and recommend relatively inexpensive adjustments that can help it avoid fraud or at least detect it earlier.

The article goes on to review recent fraud trends and to discuss the ways in which technology acts “as both an enabler of fraud, and a potent weapon against it.”

For the complete article, read “Dispatches from the War on Fraud.”

From Accounting Today, January 1, 2013, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.