Fraudbusters: Auditors' Systematic Journey in Uncovering Deceptive Practices

Today's society increasingly requires audits as a vital step to ensure accountability and transparency in corporate operations. According to an article in Business Today, accountants are often the first to identify and prevent corporate wrongdoing. R Sridharan, Chairman of the National Financial Reporting Authority (NFRA), says that auditors have to follow the laws even if they don't think they would reveal fraud. This suggests that although auditors are responsible for spotting fraud, they are not obliged to discover every case of it. Instead, they are expected to follow protocols that make it easier to identify the fraud and notify the appropriate authorities of it.
When fraud is discovered during an audit, it's similar to being an archaeologist conducting a dig and carefully removing layers of financial dirt to uncover hidden abnormalities. The reason for this is that fraud frequently lurks in transactions that appear to be lawful, which makes verifying them problematic. However, accountants employ a range of techniques to find these subtle variations in order to solve this difficult task.

Examining financial transactions for scrutinies is one method of fraud detection. When auditors discover inaccurate or missing information in financial records, it might be likened to having to piece together a puzzle with missing pieces. These outliers may cause auditors to get cautious and look to investigate the matter further.

Finding peculiar transactions is another tactic. How? Consider this: dealings with family members or others lacking the appropriate paperwork. These peculiarities draw auditors' attention as possible signs of fraudulent activity, much like brilliant flares in the dark.
The journey of the auditors now doesn't end with fraud detection; reporting fraud introduces another level of intricacy. Reporting is essential, and auditors have a duty to notify the relevant authorities. However, there are disadvantages to this process as well, the most significant of which being the likelihood for damages to the reputation of the audited organisation. Maintaining moral commitments and defending the interests of all parties can be entirely separate things.

In order to meet this difficulty, auditors follow strict procedures that guarantee truthful and moral reporting. The main goal is to tell the truth while reducing the damage to the business. It's comparable to tightrope walking, where every move needs to be considered and intentional. Crucially, auditors aren't expected to uncover every instance of fraud. Instead, they use a thorough approach to identify and notify the appropriate authorities about such fraudulent acts. It's an organised approach which maximises the effectiveness of fraud detection operations while accepting its limits. Auditors conduct incisive interviews with management and staff in addition to looking at data and spreadsheets. These discussions provide a human viewpoint that helps auditors understand the subtleties of the company and identify possible risk areas. In order to meet this difficulty, auditors follow strict procedures that guarantee truthful and moral reporting. Delivering the truth while avoiding damage to the company is the main goal. Auditors employ a systematic strategy to recognise such crimes and report them to the relevant authorities. It's an organised approach which maximises the effectiveness of fraud detection operations while accepting its limits.

Auditors conduct incisive interviews with management and staff in addition to looking at data and spreadsheets. These discussions provide a human viewpoint that helps auditors understand the subtleties of the company and recognise potential security areas. 

Ankita Debnath

References:

• https://www.businesstoday.in/magazine/deep-dive/story/auditing-the-auditors-when-it-comes-to-reporting-corporate-fraud-where-does-the-buck-actually-stop-405933-2023-11-16
• https://cfo.economictimes.indiatimes.com/news/tax-legal-accounting/auditors-are-not-expected-to-find-frauds-but-they-must-follow-processes-nfra-chair/102012389