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Question
What procedures can auditors perform to detect fradulent entries made during the consolidation process?
Dear Karishma,
I will provide you with an answer in two days. I apologize but I had a very busy last week.
Thank you for your understanding and I will follow up with this very soon.
Sincerely,
Consuelo Herrera, CAMS, CFE
Dear Karishna,
Auditors are not responsible for detecting fraud, although they must assess internal procedures to establish is they are aligned with the company's goals and needs.
The audit process is performed in accordance with the GAAS, Generally Accepted Auditing Standards. A very important part of that process is the assessment of potential situations that sponsor fraud.
The Enron scandal is plenty of example of the points missed in detecting the schemes that took place. I would suggest that you gather the papers and articles published after July, 2001 to learn more in details about the tactics used to conceal fraudulent transactions and the consolidation process that took place using "entities of special purpose".
Also, you will find a wealth of information in the webpage of the Institute of Internal Auditors, www.theiia.org as well is in the AICPA webpage at www.aicpa.org.
Because you are concerned with the consolidation process, it would be useful for you to review material posted in the Securities and Exchange Commission, SEC, which will provide you with further insights with this respect.
In brief, fraud is detected by accident in many instances. Preventing measures that could rise concerns include applying ratios' analyses, verification of sample of transactions tracing unusual and unjustified entries close the the year-end, interviewing management, and analyzing beyond the numbers. Make sure that regular expenses are not capitalized or disguised under special purpose entities.
Hope it helps and I wish you success in your research.
Kind regards,
Consuelo Herrera, CFE, CAMS
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Consuelo Herrera, International Accountant and Fraud Examiner
Expertise
I can answer questions concerning internal and operational auditing, fraud prevention procedures, internal control, the Sarbanes-Oxley Act, COSO control concepts, and management oriented auditing. I would love to provide business-owners with suggestions on how to prevent and detect fraud so that they are proactive in protecting their wealth since the very beginning of their entrepreneurial affairs. I can answer questions to both English and Spanish population. I am very committed to keep my standards up today so I know many resources where I can direct those seeking advice.
Experience
I have rendered services for private companies, profit and non for profit, in two countries. As independent consultant I have provided advice to managers in implementing procedures that streamline their operations and enhance their activities. As a staff accountant in a US CPA firm, I performed regular auditing procedures for different engagements.
Organizations
AICPA (American Association of Certified Public Accountants), ACFE (Association of Certified Fraud Examiners), ACFEI (American College of Forensic Examiners.
Education/Credentials
Bachelors of Sciences in Business Administration – Accounting
University of South Florida USF – Tampa Florida
Catholic University – Colombia
Title earned: Specialist in Tax and Customs
Central Foundation University – Colombia
Title earned: Certified Public Accountant.
On August, 2006 I passed all four sections of the Certified Fraud Exam which tests for proficiency in the following areas: Criminology and Ethics, Financial Transactions, Legal Elements of Fraud, and Fraud Investigation.
Awards and Honors
As employee of Forensic Technology Inc. a Canadian company with locations and sites worldwide, I was the winner of the 2005 President's award in the category of Cost Savings through Efficiency or Innovation granted in January 2006 in Montreal, Canada.
Past/Present Clients
I have provided advice to all kind of companies: manufacturing, service, consulting, non for profit organizations, etc.
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