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This is a great little article from the Journal of Accountancy that features a 10-question quiz to help you assess your fraud IQ. Whether you know the answers or not (the answers are included in the text), the quiz provides some great insight into appropriate steps for fraud prevention.
By way of example, let’s take the first question (What is the primary objective of a fraud risk assessment?). Fraud risk assessments are an essential first step to an effective prevention program. Without first understanding the problem, you will be hard-pressed to identify the most effective solution or, as Steven Covey (author of 7 Habits of Highly Effective People) would put it, “Seek first to understand, then to be understood.” I am often asked, “How can I prevent fraud from happening to my company?” This is a very hard question to answer without first understanding the fraud risks and the opportunities would-be fraudsters will exploit. There are many common ways that fraud is prevented, but by just implementing the common items, you may be proposing the right solution to the wrong problem. In addition, once you identify where your company is vulnerable to internal and external fraud, many times the countermeasures will stand out and be obvious.
These questions are very familiar and remind me a lot of the content included in the uniform examination candidates must pass to earn the certified fraud examiner (CFE) credential. The content was by far and away the most interesting academic study I have ever undertaken in my professional career. Unlike a lot of professions, the business of fraud has so many human ingredients and topics. That is one reason why it is so prevalent in our society and why it is so confusing and difficult to understand. I think fraud’s place in the human condition is what makes the study of it so interesting to me.
Take the quiz and see how you do. See how your organization does with respect to the recommendations by the author. Contact me if you have any questions and I would be happy to continue the conversation.
This article or blog contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.
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