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Do you rely on auditors to detect financial red flags at your organization? You might be surprised to learn that only 4% of fraud cases are detected by auditors, which means it is time to switch your focus to internal controls instead. More than 43% of accounting scams come to light through employee tip-offs, or reports from vendors and other sources. That means you are better off taking a proactive approach.
To make matters more urgent, payments and invoice fraud attacks rose by 112% in the second quarter of 2020 thanks to the pandemic. As companies adapted to COVID-19, remote or hybrid teams may have exacerbated this problem as their controls over their organization’s finances became weaker. At the same time, business email compromise attacks shot up by 11% over the same period.
Let’s look at some recent accounting scandals, and some steps you can take to make sure the same thing does not happen to your business.