Jury standards, created by juries when assessing claims, are made with the benefit of hindsight. CPAs don’t have this same benefit when it comes to beating fraud. While uncovering fraud is part of a CPAs professional standards, it can be difficult to detect.
CPAs can address this issue by limiting risk exposures. Oftentimes, following standard professional standards is not enough to detect fraud or theft. The Journal of Accountancy offers seven techniques to protect CPAs against fraud and theft exposures.
- Regularly evaluate the risk of the client and engagement.
- Use engagement letters on all engagements.
- Stay within the scope of engagement.
- Be fraud aware.
- Apply professional skepticism to all engagements.
- If you see something, say something.
- Document, document, document.
The expectation to uncover fraud can be difficult to meet, but by following the above guidelines and proactively looking for irregularities, CPAs can more often avoid claims and jury decisions.
For a more in depth description of the seven techniques listed above, visit the Journal of Accountancy website.