Do Audits Work?

Do Audits Work?

Audits are held up as the gold standard in fraud protection. Whether it is in the corporate setting or personal finance, audits are almost universally viewed as unpleasant experiences, but experiences that make things better. A bigger story that has a much wider base than formal audits is the concept of fraud prevention. Fraud is an enormous problem for corporations. Tens of billions of dollars annually are lost every single year to fraud. Identity theft, which is more an issue for individuals than for corporations, is a growing problem that has received endless coverage and analysis in every manner.

Audits are held up as great tools to fight fraud and to help establish procedures to protect against further fraud and identity theft. But do they work?

The answer, surprisingly, is that audits only uncovered 3% of frauds last year, as opposed to the 7% that were uncovered by accident. Even worse, the most vulnerable businesses to fraud and identity theft, small business, were the least likely to have formal procedures in place.

What do you do?

Periodically check your financial statements, credit card activity, and make sure that your passwords are all up-to-date. A great point in the article, that I agree with, is that one of the best ways to prevent fraud and identity theft is to always be vigilant, keep yourself informed, and keep relevant on all of the best fraud and identity theft.

Happy Reading!

http://www.cnbc.com/id/101681098