Fraud Detection

Fraud detection is the act of actively searching for fraud in the workplace or within an organization. There are many signs that fraudulent activity may be occurring within an organization and diligent attention to these signs can save the company or other companies a large amount of money. Some of the most common signs are out of balance ledgers, adjustments to receivables or payables, inventory shortages or discrepancies, duplicate payments, excess purchases, ghost employees, fraudulent expense reimbursement requests, as well as many other schemes in the workplace.

By looking closely at transactions and employee behavior, these schemes can be uncovered and stopped before incurring too much damage. Most businesses establish controls as a means to prevent fraud and other ethics issues. Transactions that circumvent these controls nearly always lead to a fraud scheme or similar unethical activity. Companies may employ personnel specifically to look for these types of transactions and fraudulent activity or may take advantage of one of the many fraud detection agencies available externally in order to uncover these schemes.

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Fraud detection is an vital element in auditing organizations. It must be studied and applied thoroughly during the conduct of audit in any organization.