Detecting fraud through tailor-made auditing of information systems

Article Abstract:

Detection and reporting of computer fraud and securities fraud perpetrated through misuse of automated information systems should be among the services offered by outside auditors. Fraud auditing procedures are described in detail for the public accountant, including: incorporating detection procedures in overall fraud deterrence policies; computerizing detection procedures; staffing the fraud audit effort; identifying areas in which fraud is most likely to occur; and analyzing fraud audit data prior to reporting the occurrence of fraud. Two types of fraud are distinguishable: the single large occurrence, referred to as the 'smash and grab' fraud; and the multiple occurrence of small fraudulent acts, referred to as 'drip' fraud. Smash and grab frauds should be detectable through regular audits of corporate control procedures, whereas drip fraud is more difficult to detect and isolate. Fraudis most often performed by individuals who have established relationships with the corporate victim, and it is detectable from disruptions in the corporation's normal business pattern or expected operating results.

Accounting and auditing, Fraud, Accountants, Computer crimes, Securities fraud, Management information systems, Information management

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Regulation of auditors: implementation of the EC Eighth Company Law Directive

Article Abstract:

The Institute of Chartered Accountants of Scotland has submitted a written report of its reactions to the European Economic Community's Eighth Company Law Directive, insofar as this directive applies to the regulation of auditors. The Institute's report was filed with Scotland's Department of Trade and Industry in January 1987. The report is reprinted in its entirety. The Institute's concerns with the proposed auditor regulations focus on three issues: (1) the responsibilities and powers of Scotland's Secretary of State with regard to such regulation; (2) the possible incorporation of Scottish auditors, and whether such incorporation would affect the auditors' regulation; and (3) the methods to be employed for monitoring compliance with professional auditing standards.

Europe, Reports, Auditors, European Economic Community, Institute of Chartered Accountants of Scotland

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Regulation of auditors: implementation of the Eighth Directive

Article Abstract:

The European Community's (EC) Eighth Company Law Directive governs the auditing profession. The EC has recently made proposals to implement this directive, which covers: the supervision of auditors by professional bodies accountable to the Secretary of State; education and training of auditors approved by professional bodies accountable to the Secretary of State; the removal of prohibitions against incorporation of auditors; and the safeguarding of auditors' independence.

United Kingdom, Great Britain

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