Association of Local Government Auditors

Detecting Fraud - Engaging multiple resources and approaches

Fraud is an insidious virus that can infect any organization.  In some cases, fraud rears its ugly head as isolated cases of asset misappropriation (all types of organizational theft) by low or medium level employees or in an insidious fashion, through failed tone at the top and systemic malfeasance leading to financial statement fraud, conflicts of interest, and large asset misappropriates by every level of the organization.  Key in the effort to combat this virus is bringing multiple resources and different approaches to detect and respond with fervent persistence.

The Publications Committee is proud to present this issue with resources and approaches to make you successful.  The Quarterly provides you guidance in using different approaches - statistical methods as presented by Dr. Dan and Kim Kneer, industry experts, or Austin, Texas City Auditors Office's comprehensively planned audits integrating fraud detection in every audit phase as articulated by Jason Hadavi.  Amada Lamb and Dr. Shea Marshman highlight the importance of rethinking internal controls.  Stan Wilmer from the City and County of Denver, Colorado outlines key tests in controlling human services fraud.  Carmelina Di Mondo from Toronto, Canada's Auditor General's Office gives a Q&A on whistleblower hotlines while San Diego's Al Allison advocates the end game of fraud detection - recovery of assets and the value of the new Certified Specialist in Asset Recovery certification.

While the Association of Certified Fraud Examiners compiles statistics regarding the instances of fraud, most of the information is self-reported.  There is no reliable mechanism to identify how much, what type, and where fraud occurs.  Consequently, to address this threat, it is the responsibility of every auditor and employee to play a role in fraud detection and response.  Offering a fraud hotline, training staff on fraud knowledge and internal controls, integrating fraud planning into audits, and using analytical tools are necessary to arm your organization to combat fraud.   Read on and learn what others do to fight the good fight.

We hope you enjoy this edition of the Quarterly.  Our Winter Quarterly issue topic will be Recruiting, Training and Retaining Audit Staff.  Articles are due on November 15^th.  Submit your articles to editor@governmentauditors.org.

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