Fraud Investigations and Monitoring

Fraud investigations can be performed by auditors, either internal or external to an organization, in order to uncover irregularities in accounting and other evidence linking an individual or organization to fraudulent practices. Fraud investigations will usually involve internal and external audit organizations, controllers, security personnel, lawyers, investigators, and other specialists from inside and outside an organization in order to analyze accounting records, business practices, business communications, assets, computer and computer security records, and any other viable source where evidence may be found.

Liaisons with local, state, or federal authorities may be required depending on the type, and magnitude of the fraud being investigated. Upon conclusion of a fraud investigation, reports will be made to the organization and to the relevant authorities in cases where civil and/or criminal charges will be necessary. A prudent organization will use those reports to redesign business processes and codes of conduct as well as design additional controls and security measures to protect the organization from further occurrences upon resuming regular business if and when authorized to do so.

Fraud monitoring looks for transactions meeting specific characteristics and marks them as possible fraud. These systems also can detect accounting errors and other types of misuse. It is then recommended to review the flagged items against records to determine if the entry was a result of error or if it is indeed fraud.

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If frauds are detected in an organization, this must be thoroughly investigated. All evidences must be gathered and audit working papers must be prepared.