Fraud Risk and Detection in Small Business Systems Auditing – Acc569

Fraud Risk and Detection in Small Business

Research Paper

Name of Student

Systems Auditing – ACC569

Professor

November 21, 2010

The idea of fraud in a small business covers every part of the business; an article written in SmartPros Ltd says that “Five percent of a typical businesses revenue is lost to fraud each year.” (Corley, 2010). The cost of fraud can be measured in dollars, business position within the industry of operations, and trust of the owners in their employees. The measure is not the point of discovering, stopping, or prosecuting those that conspire to commit the act of fraud. The main reasons in taking the steps to prevent, uncover, and resolve the avenue for fraud is to accrue for the time lost. The un-measurable loss of trust directly equals a waste of productive hours in restructuring of procedures after fraud is uncovered. A secondary point is that of the waste in productive hours to uncover to fraud, capital lost now is multiplied by the loss of productive hours, the loss due to the fraud and amount lost from other productive areas. Once fraud in uncovered the task begins in uncovering the depth of the fraud, who is involved and who or what procedure broke down. With the primary offender working directly or indirectly with the accounting or auditing departments usually the prevention measure is the procedure in place.

The procedure or controls used by the small business can be the only preventative measure in place to stop or uncover the fraud and those that commit the act. The idea of a procedure preventing fraud might be found odd to a person who has not participated in developing a procedure for an accounting or auditing department either to prevent fraudulent acts or recover when these acts take place against a small business. For those that have participated in developing a procedure the preventive thinking brings about a real counter fraud mind set, in how can a business work together...