AFCE Occupational Fraud 2026 Report
How Audits Support Fraud Prevention and Detection
Auditors play a crucial role in supporting the integrity of financial reporting. Here’ s how certain audit procedures may help reveal suspicious activity and identify weaknesses in your business’ s controls:
• Risk assessments. These assessments identify high-risk areas for misstatement or errors. They help direct the auditors’ attention to the accounts and transactions that warrant more rigorous audit procedures. Auditors analyze the business’ s operations, financial reporting processes, internal controls and industry environment to pinpoint potential risks, then develop audit plans for these areas.
• Testing transactions and controls. Auditors perform various procedures during fieldwork to help them detect discrepancies that may indicate fraudulent activity. For example, they may test certain financial transactions and account balances to verify their accuracy and completeness. They may also examine supporting documentation, such as invoices, contracts and bank statements, to ensure transactions are legitimate and properly recorded. And they might confirm accounts receivable, review pending litigation and physically observe year-end inventory counts. Auditors customize their procedures to fit each business’ s risk assessment.
AFCE Occupational Fraud 2026 Report
Download the full report to learn more about the most common types of fraud impacting organizations today and its costly impact.
Auditors are trained to recognize the warning signs of fraud, including unusual transactions, inconsistencies in financial records and deviations from standard procedures. When auditors identify red flags, they may ask questions and conduct additional audit procedures to help ensure the financial statements are fairly presented and conform to GAAP.
• Supporting compliance and accountability. Businesses must comply with a wide range of laws and regulations, including those related to financial reporting, taxes and corporate governance. Auditors consider laws and regulations that could have a material effect on the financial statements and may identify issues that warrant management’ s attention or further review.
Strengthening Your Fraud Prevention Strategy
No organization is immune to fraud. But an external audit can help reduce your risk by examining financial reporting procedures, evaluating internal controls and identifying potential warning signs before they become larger problems. Look to our audit and forensic accounting pros to help you assess fraud risk, build a stronger prevention strategy and investigate suspicious activity
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