Thursday, December 23, 2004

Outcome-oriented auditing

Outcome-oriented auditing - looking at a situation as a whole rather than its individual parts - can help think like a fraudster and find deeply embedded crimes.
Focusing on the whole and not just the parts of a F. audit has helped find F. in numerous situations that probably would have overlooked.
Instead of looking at separate elements (such as each individual internal control in a transaction) and testing each individually, you look at the transaction or activity as a whole. You ask yourself these questions:
- Who are the customers (internal and external)?
- What are the customers' expectations?
- What would happen if expectations weren't met?
- If something were to go wrong, what would you expect to go wrong?
Then look for evidence that someone may have followed this course of action. Once the first indication is found that that someone has, in fact, attempted to perpetrate a F. scheme, dig deeper.
Bonita Warnell explains about a case in which outcome-oriented auditing helped to find thousands of dollars in well-hidden overcharges.