Most mid-size to large organizations rely on internal and external audits as a key preventative measure against fraud. The problem is, many CFOs assume that a routine financial audit will reveal financial anomalies that could be fraud. Unfortunately, quite the opposite is true.
Audits almost never succeed at finding fraud: external audits find it 4 percent of the time, and internal 15 percent, according to the Association of Certified Fraud Examiners’ Report to the Nations.
It is not uncommon to hear from non-accountants who incorrectly assume that a clean audit means there is no fraud on the books. This misunderstanding of the purpose of an audit is one of the main reasons why companies rely on them to detect fraud, when that is, in fact, not their true intent.