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Attempts to contain deceptive behaviour by business have failed during COVID, a global survey finds.
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9 out of 10 auditors struggle to prevent fraud amid pandemic
11 March 2022
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10 minute read
The huge shift to remote working due to the pandemic has spurred a rise in security and fraud risk and 89 per cent of auditors founnd it challenging to prevent, according to the 2022 Caseware State of Internal Audits report.
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It said organisations are responding by fast-tracking investment in prevention technology, with more than a third admitting to an inadequate fraud prevention and response plan.
“While the trend shows internal auditors have an important part to play in risk management and their influence is increasing in the area of fraud prevention strategy, many continue to operate without a fraud prevention and response plan,” said Scott Epstein, chief product officer at CaseWare.
“On a positive note, 31 per cent of respondents say their organisation is currently developing such a plan, with 64 per cent saying they already have one in place.”
Of respondents to the survey, 46 per cent said remote working has made it “somewhat more difficult” to prevent fraud while 43 per cent said it is “more difficult”.
More than 70 per cent said the pandemic has led to an increase in fraud threats with auditors especially concerned about a rise in theft of assets such as cash, inventory, services and intellectual property.
Others cited credit card abuse, falsifying expense reports, collusion with a third-party vendor or service provider, and falsifying or manipulating financial statements as emerging concerns.
When it comes to top challenges over the past two years, almost a third of those surveyed said moving from manual processes towards more efficient workflows is a key hurdle, while 27 per cent pointed to challenges in adopting new audit technology.
Others see adjusting to remote work, lack of training and skills, and deriving insights from large volumes of data as key concerns.
Four out of 10 internal auditors said they either don’t currently use or are unaware of whether their organisation uses analytics software to help mitigate fraud risks.
Mr Epstein said CaseWare’s survey revealed changes are happening across most internal audit departments and are being accelerated by the pandemic and a need to change business processes and ways of working.
“Internal auditors are tasked to meet the challenges of increasing fraud risk and are pressured to do more, yet many still seem unprepared to manage the fraud risk for their organisation,” he said.
“At a time when online business and commerce has never been greater, they will need to move quickly to finalise and execute these plans to thwart the growth in online threats.”
CaseWare International, a software provider, surveyed 3,926 global business professionals with internal audit responsibilities. Subjects range from managing business change, addressing challenges, and using technology to battle fraud risk.
The survey, which runs annually, was conducted from September through November 2021.
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