Survey of More Than 900 Auditors From Firms of All Sizes
See Huge Fraud Risk
Brentwood, Tenn. - More than 37 percent of auditors expect to find
fraud among their own clients, according to a new survey of more
than 900 auditors conducted by Confirmation.com, the creator and
leading provider of secure audit confirmation services.
The survey polled global users of the Confirmation.com system,
which includes all of the top 100 accounting firms. Auditors were
asked about the perceived risk of uncovering fraud during the
annual audit process and more generally about finding fraud within
their own practices throughout the year.
While 37.6 percent of respondents expected to find fraud among
accounts they audit, they expected competitors to find fraud at a
much higher rate: 66.9 - a disconnect between a given auditor's
expected fraud exposure risk and the general expectations for the
industry, according to Confirmation.com founder and chief marketing
officer Brian Fox.
"Auditors often exhibit this particular form of disassociation
bias," said Fox. "They are certain that they would never take
on a client who they believe would commit fraud. Since they
know fraud exists, they believe it is something that will most
likely happen on someone else's watch."
The survey also found that among auditors, the percentage expecting
to catch fraud is lower than the percentage thinking fraud will
occur within their client base. Fox added, "This is
reflective of other research into fraud, which typically shows that
external audits historically have been among the least effective
means of uncovering wrongdoing-well behind accidental discoveries
Auditors often overlook their own suspicions when sourcing
business. While 20.3% of respondents had walked away from a
prospect they suspected of fraud, 30.9% had not, and 48.9% had
never suspected a prospect of fraud at all. Similar
percentages reported firing existing clients because they suspected
Other key findings of the study included:
- Nearly 25% of respondents expect audit fraud to increase in
- Nearly 73% believe new regulations on the accounting industry
have led to a more labor-intensive, expensive process, while only
9% feel the process has become more streamlined.
- More than 60% of respondents expect their own 2012 revenues to
increase, while 49% expect an increase in hiring.
- Technology (40%) narrowly edged increased internal audit
staffing (37.2%) as the major means by which to catch fraud.
- 52.3% of responders would require third party verification of
bank and corporate responders to fight confirmation fraud, while an
additional 34.4% would mandate use of electronic confirmation
platforms, thus far outpacing traditional checks like long-term
client relationships (8.3%) and government programs that encourage
Auditors and financial institutions in more than 100 countries use
Confirmation.com because the propensity for fraud and the magnitude
of those frauds on a global scale are both increasing. By
verifying the authenticity of each user, the company's cloud-based
solution not only improves the quality of audits, it brings greater
investor confidence into the financial statements.
Confirmation.com is the creator and world's leading
provider of secure electronic audit confirmation services. It
processes over $1 trillion in confirmation information annually for
a majority of public companies, as well as private companies,
non-profits and government agencies. In addition to its bank
confirmation solution, the company provides solutions for more than
30 different types of audit confirmations including accounts
receivable confirmations. Confirmation.com is the Preferred
Provider of Electronic Confirmations for the AICPA Trusted Business
Advisor™ Solutions Program and is endorsed by the American
Bankers Association. Confirmation.com has also received numerous
awards including being a multi-year alumnus on the Inc. 500 list
for 2010 and 2011. Several hundred In-Network responding
companies including all of the Top 10 banks in the U.S. and over
8,000 accounting firms in more than 100 countries trust
Confirmation.com for their audit confirmation needs. For more
information, visit Confirmation.com.