| Process of Proactive Detection of Fraud | | | | understanding the common risks they are able to |
| 1. Build the Proper Team | | | | identify those symptoms that would appear in a |
| Regardless to the total size of the team, there | | | | fraud scheme in that area. In this step it is |
| should be at least three specific experts. The first | | | | important to continually brainstorm about how |
| is a domain expert that has an inside perspective | | | | employees could potentially commit fraud given |
| of the industry and the business. The second is a | | | | the current control system. |
| technology specialist that is familiar with the | | | | 4. Clearly Define the Targeted Fraud Symptoms |
| system being used by the company. Lastly there | | | | & Search for Them |
| needs to be someone familiar with fraud and the | | | | In order to proactively detect these risks it is |
| symptoms involved with it. | | | | important to identify those symptoms that would |
| 2. Team Must Develop an Understanding of the | | | | most likely reveal a case of fraud. To read more |
| Business | | | | about the identifying risks please see the article |
| Similar to any audit plan, a fraud investigation | | | | Fraud Symptoms [ While searching for the |
| must be customized to the particular company | | | | symptoms it is important to collect company data |
| being observed. All business are different thus | | | | and compile a list of suspicious looking transactions. |
| they clearly have differing areas of potential fraud. | | | | 5. Investigate High Risk Symptoms |
| After identifying the different functional business | | | | The most efficient way to investigate these |
| areas the team should walk through, talk with | | | | symptoms is the use of computer analysis. By |
| employees, observe procedures, review | | | | looking into only those risks that can not be |
| documentation, and other learning the business | | | | explained by further analysis the team is able to |
| procedures. | | | | save time and resources. The identification of |
| 3. Perform a Risk Assessment | | | | abnormalities at this stage will require much |
| Based on the understanding gained about the | | | | scrutiny during investigation and will be an high risk |
| different areas of business the team should then | | | | area when performing the annual audit. |
| evaluate those high risk conditions. By | | | | |