The Red Flags of Fraud: Internal Auditors’ Knowledge of the Business Makes Them Ideal Candidates to Detect Unethical Behaviors
Internal Auditor, October 2016
Posted: 7 Mar 2019
Date Written: February 15, 2016
We discuss how technology enables companies to include early warning indicators in their accounting information system and how a more proactive search for red flags can help a company to reduce fraud and improve management’s reaction to adverse events. In 2013, the SEC started its Accounting Quality Model (AQM) which utilizes red flags based on past financial statement fraud cases to calculate a score indicating possible fraud. Examples for red flags include accounting or documentary red flags, behavioral red flags or analytical red flags.
Keywords: fraud, forensic accounting, red flags
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