This document provides guidelines and steps for effective fraud detection.
Auditing for fraud is more of an intuitive process than a formal, analytic methodology. Skill depends on the right mind-set (thinking like a thief, probing for weaknesses) and practice. One seeks relevant information, organizes it in some meaningful way, and then sees the pattern it creates. Every fraud has its own unique aspects. All thieves do not think alike. They tend to be opportunists. Given a set of circumstances that allow them to steal, they take the easiest way. In time, all frauds are revealed by auditing techniques such as counting, confirmation, inspection, observation, comparison, inquiries, ratio analysis, account analysis and internal control testing.