Audit deters company fraud, says ACCA
Company managers are the source of 84% of frauds committed by small and medium sized British companies, but the audit is the most effective deterrent, says a new ACCA report.
According to Jonathan Beckerlegge, chairman of ACCA’s Audit Committee, in 63% of cases, the auditor was the person responsible for discovering fraudulent activity.
He added: ‘At a time when government is looking for greater corporate transparency and accountability, this survey shows the value of the audit.’
The ACCA survey, which included 1,250 member firms representing more than 300,000 UK companies, found that personal gain was the primary reason for managers committing corporate fraud and confirmed a similar study undertaken by the Auditing Practices Board.
Fraud often resulted from managers manipulating financial records to disguise, suppress or alter transactions. In almost 70% of cases, management over-rode financial controls to allow the fraud to take place.