VideoTo be able to unearth fraud stemming from late management entries to financial statements, auditors also need to be careful not to sign off on financials before chief executives do. "If the auditor doesn't look at all the documentation at the point that management does the final statements, there could be a gap," according to Victor.
Unlike the situation with AS2, the board isn't suggesting a change in the fraud-detection rule itself. Instead, the report's view is that "the problem is not the car, it's the driver," he says.
Indeed, the current fraud-detection rule "is very prescriptive of what auditors need to do," according to Victor. In reading in the report about their failures, he adds, "you stand back and wonder, where was their head at?"
Reader CommentsDisplaying 3 of 3
Pamela Zander
Feb 8, 2009 3:58 AM ET
Detecting Fraud/Auditors
White Collar crime has become rampant with the advent of software programs utilizing high tech number shifts in design, … more
David Newman
Feb 16, 2007 3:23 PM ET
Game Theory and Ethics
The article states that 'In a similar vein, top auditors may be failing to press their underlings to provide enough … more
ROBERT F. Kelley
Feb 15, 2007 1:36 PM ET
Fraud is a game
Solving the mysteries of fraud detection is possible using game theory.
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