The CFEs estimated that the typical organization lost 5% of revenue in 2016 as a result of fraud. The total loss caused by the cases in the study exceeded $6.3 billion, with an average loss per case of $2.7 million.
There are numerous fraud cases around the world, that have happened to different firms. And it is not surprising that it will keep happening again and again, as the current industry system has serious defects, the reasons being the ‘conflict of interest’ and ‘trust’.
Auditors involved in verifying the accuracy of financial statements are in a strange position because they perform the audit by charging the clients. This behaviour creates a problem: the audited financial information may be compromised by the auditor in order to please the clients. Auditors only need to provide a reasonable assurance according to the risk assessment of a certain materiality level, and do not provide a complete guarantee of the figures.
Accounting and financial transactions are ultimately made due to trust and transparency. The ability to back trace, modify and to issue false sales or manipulate the profits have led investors to have an inherent lack of trust in the business.
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