The CPA Journal, Jan 2022
By Iralma Pozo, CPA
A Panel Discussion on Fraud, Technology, and Audit Quality
IN BRIEF
Corporate fraud has resurfaced in the headlines, troubling those who might have believed the profession had moved past its audit failures of the past decades. Thought leaders throughout the profession are using the current moment to reexamine where the profession is headed. A series of discussions with the moderator covers what the profession can do to make audits more effective and how the next generation of accountants can meet the public’s expectations.
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The financial news headlines noted during the current pandemic appear to harken to earlier times with the news of audit failures and corporate fraud. Notably, the Wirecard AG scandal reminds one of the previous failures of WorldCom and Enron. According to the Association of Certified Fraud Examiners (ACFE) 2020 Report to The Nations—2020 Global Study on Occupational Fraud and Abuse, 43% of occupational frauds were detected by a tip, owners/executives committed 20% of the frauds with a median loss of $600,000, and 42% of fraud-sters were living above their means.
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Regulators still expect external auditors to use good execution, good documentation, and good judgment despite the fact we are in a pandemic.
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Quality staff—whether experienced hires or new hires—will no longer tolerate working for firms that assign them busy work that can and should be automated.
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While auditors are not mandated to provide absolute assurance, the standards do expect them to detect substantial risk of misstatements linked to fraud.
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It is time for us to celebrate those in our honorable profession who identify fraud and help catch the bad guys.
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