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Why Auditors Cannot Detect All Fraud: Real Examples and Insights from an Expert Witness

Auditors are expected by the public to find financial statement fraud, even though U.S. GAAS has long held that they might not be able to detect all frauds. The following discussion draws upon the experience of an expert witness in numerous major fraud cases in order to illustrate situations in which auditors can—and cannot—reasonably be expected to detect fraud. Certain factors can make fraud nearly impossible to discover, even when a competent GAAS audit is performed, and certain factors are often present when auditors should have detected fraud.

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Publisher's Column

Making the Right Choice of Business Entity

Typically, individuals have more contact with their financial advisor or CPA than with their attorney; thus, advisors often tackle questions beyond the usual tax and accounting issues. This is particularly true for sole proprietors who have grown to the point where they are subject to additional liability risk. Full Story

Managing Your Practice, Managing Your Risk

CPAs know about risks and obligations. When a CPA provides an opinion, it’s not only the client who relies on that information to be true, but also regulators, the public, stockholders, lenders, and other financial institutions. With so many vested interests, it is not surprising to find that professional liability is a significant concern for most CPAs.
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Professional Liability Trends and Developments

Many of the professional liability claims that CPAs reported over the last 18 months fall in line with historical claims data, such as the failure to detect fraud and missed tax deadlines; however, as the profession diversifies and faces increased taxing authority oversight, new and emerging claims are developing. Full Story

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at practitioners, educators, regulators, and other financial professionals. Our goal is to provide the Journal’s readers with insight and analysis on developments in the areas of accounting, auditing, taxation, finance, management, technology, and professional ethics.

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