Anti-Fraud Initiative
Financial reporting fraud is an ongoing concern for investors and other capital market stakeholders. While there is no silver bullet solution for eliminating fraud, the Center for Audit Quality’s (CAQ) Anti-Fraud Initiative endeavors to increase collaboration and communication among members of the “financial reporting supply chain” to help advance efforts to lessen fraud risk.
The CAQ’s collaboration with groups like Financial Executives International (FEI), the National Association of Corporate Directors (NACD) and The Institute of Internal Auditors (The IIA), as well as other interested parties, will leverage existing resources and facilitate the development of tools and information targeted to each stakeholder group.
CAQ Publishes Hollate Manufacturing Case Study
The Hollate Manufacturing Case Study examines a potential material fraud at a fictional manufacturing company in order to raise awareness of environments in which financial reporting fraud might flourish. The Case Study and companion Discussion Guide provide a roadmap to help members of the financial reporting supply chain – audit committees, financial executives and internal and external auditors – engage in interactive discussions on stopping a fraud once it has been identified.
NACD Releases New Skepticism Webinar Series to Combat Fraud
On October 1, NACD released the first in a series of webinars on skepticism in the financial reporting supply chain. Developed in conjunction with the anti-fraud collaboration partners, including the CAQ, FEI and The IIA, the NACD webinar series is designed to help members of the supply to expand their use of skepticism to deter and detect financial reporting fraud.
The first webinar, “The Ethics and Etiquette of Skepticism,” is moderated by CAQ Governing Board member Michele Hooper, an audit committee chair and expert in corporate governance. Hooper and panelists Mary Mitchell of The Mitchell Organization and Bill White of Northwestern University highlight how auditors, audit committee members, financial executives, and internal auditors can exercise skepticism effectively in their respective roles by creating a culture that encourages verifying information through probing questions.
Additional webinars include “Skepticism and the External Auditor,” “Skepticism and the Audit Committee,” “Skepticism and the Financial Executive,” and “Skepticism and the Internal Auditor.” The webinar focusing on the external auditor features CAQ Executive Director Cindy Fornelli.
For more information, visit NACD’s Skepticism webpage.
| FEI Launches Fraud Literacy Quiz |
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Financial Executives International (FEI) has developed a new Fraud Literacy Quiz. The quiz, which is open to the public, comprises a series of questions designed to assess an individual’s knowledge on topics related to deterring and detecting financial reporting fraud. Click here to begin the quiz. In addition, a feature article in the November issue of Financial Executive magazine is available online. FEI is offering free CPE credits to individuals who read the article and successfully answer questions about its content. (Note: After reading this article, non-members seeking CPE Credit will be asked to create an account in FEI’s CPE Center prior to taking the quiz. There is no charge to open an account.) |
Deterring and Detecting Financial Reporting Fraud – A Platform for Action In 2009, the CAQ hosted five substantive discussions on fraud deterrence and detection across the U.S. and in London. Participants in the discussions represented company management, boards of directors, audit committees, internal and external auditors, regulators, investors, academics, and financial media. The findings from these events, as well as in-depth interviews and related research on the issue of financial reporting fraud at public companies are the basis of the CAQ’s report, Deterring and Detecting Financial Reporting Fraud – A Platform for Action. |
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| CAQ Executive Director Cindy Fornelli and Governing Board Co-Vice Chair Michele Hooper discuss the CAQ’s anti-fraud initiative in two videos. In the first video – “Deterring and Detecting Financial Reporting Fraud – A Platform for Action” – Hooper and Fornelli discuss the findings of the CAQ’s new anti-fraud report, including the conditions that lead to fraud, the themes that can mitigate those conditions and the CAQ’s collaborative partners with FEI, NACD and The IIA. In the second video – “The Case for Collaboration: Increasing Anti-Fraud Effectiveness Across the Financial Reporting Supply Chain” – Fornelli and Hooper describe possible areas for future work and collaboration that would enhance thinking around fraud deterrence and detection. Among the areas for future collaboration: advance the understanding of the conditions that contribute to fraud; promote efforts to enhance skepticism; moderate the risks inherent in focusing only on short-term results; explore the role of information technology in deterring and detecting fraudulent financial reporting. Prior to the release of Deterring and Detecting Fraud, the Association of Certified Fraud Examiners interviewed Fornelli to discuss the CAQ’s anti-fraud initiative and preview the findings of the CAQ’s report. |
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| Video: Deterring and Detecting Financial Reporting Fraud – A Platform for Action | |
| Video: The Case for Collaboration: Increasing Anti-Fraud Effectiveness Across the Financial Reporting Supply Chain |
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