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Scientific Annals of the „Alexandru Ioan Cuza” University of Iaşi
Economic Sciences
59 (1), 2012, 79-94
DOI 10.2478/v10316-012-0005-x
FRAUD, A GROWING PROBLEM - CAN WE MITIGATE IT?
Victoria STANCIU
Academy of Economic Studies of Bucharest
Bucharest, Romania stanciuvictoria58@hotmail.com Abstract
Over the past few years the companies had to face a difficult economic climate. In this instable and sometimes unpredictable environment, organizations have changed their strategies, building and applying new business models based on globalization and new technologies, understanding that traditional business approaches may not be effective in the new economic circumstances. The complexity of the activities performed determined the emergence of new risks. A particular characteristic for the crisis years is also a higher potential risk of fraud and fraudulent financial reporting. Fraud is a risk that should not be ignored and many companies have recognized that the impact of fraud is increased in the past years. Senior managers have become more concern on fraud risk and try to understand how their companies might be vulnerable to fraud.
The objective of this paper is to examine the fraud phenomenon and fraud vectors aiming at identifying appropriate prevention actions. The author focuses on the internal audit role in fraud prevention, identification and investigation. Our research results conclude on means of improving fraud risk monitor and prevention, providing suggestions for proactive approaches in control processes’ improvement.
Keywords: fraud, fraudulent financial reporting, red flags, internal audit
JEL classification: M42, G34
1. INTRODUCTION
Studies on accounting field have showed the seriousness of fraud problem and its increasing trends. Researches within this area have emphasized the fraud models and suggested how to prevent, detect and investigate frauds. Strong corporate governance and a solid corporate culture are important
Economic Sciences
59 (1), 2012, 79-94
DOI 10.2478/v10316-012-0005-x
FRAUD, A GROWING PROBLEM - CAN WE MITIGATE IT?
Victoria STANCIU
Academy of Economic Studies of Bucharest
Bucharest, Romania stanciuvictoria58@hotmail.com Abstract
Over the past few years the companies had to face a difficult economic climate. In this instable and sometimes unpredictable environment, organizations have changed their strategies, building and applying new business models based on globalization and new technologies, understanding that traditional business approaches may not be effective in the new economic circumstances. The complexity of the activities performed determined the emergence of new risks. A particular characteristic for the crisis years is also a higher potential risk of fraud and fraudulent financial reporting. Fraud is a risk that should not be ignored and many companies have recognized that the impact of fraud is increased in the past years. Senior managers have become more concern on fraud risk and try to understand how their companies might be vulnerable to fraud.
The objective of this paper is to examine the fraud phenomenon and fraud vectors aiming at identifying appropriate prevention actions. The author focuses on the internal audit role in fraud prevention, identification and investigation. Our research results conclude on means of improving fraud risk monitor and prevention, providing suggestions for proactive approaches in control processes’ improvement.
Keywords: fraud, fraudulent financial reporting, red flags, internal audit
JEL classification: M42, G34
1. INTRODUCTION
Studies on accounting field have showed the seriousness of fraud problem and its increasing trends. Researches within this area have emphasized the fraud models and suggested how to prevent, detect and investigate frauds. Strong corporate governance and a solid corporate culture are important
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