Articles

CA/CM as Preventive Care against Fraud

By James R. Littley and Andrew M. Costello, CPA, CFF, CFE

A challenging economic environment inevitably amplifies the risks and opportunities of fraudulent behavior.

Managers and employees are facing heightened pressure to meet revenue and cost targets, so some may resort to improper means of achieving those increased expectations-especially if they perceive their jobs to be in jeopardy if they do not meet their targets. In addition, common cost-cutting measures such as downsizing, outsourcing, and off-shoring can create vulnerabilities in internal control environments. These dynamics, and many more, challenge ethical behavior daily.

Along with preventive elements such as codes of conduct, due-diligence hotlines, and whistleblower mechanisms, continuous auditing and continuous monitoring (CA/CM) can be a key component of an effective fraud risk management process. In addition, CA/CM shifts management's and the internal audit department's focus and review from a traditional retrospective/detective approach to a proactive/preventive stance.

To read the entire article, please visit http://www.picpa.org/Content/40827.aspx of the Pennsylvania Institute of Certified Public Accountants