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Financial Statement Fraud Detection for Internal Auditors

Course Description

​​Print-friendly Course Description and Outline

This course focuses on internal audit’s role in detecting financial statement fraud by identifying potentially significant or likely financial statement fraud schemes and developing audit steps to help detect them. This course, a joint effort between The IIA and Deloitte & Touche, is appropriate for internal auditors at all levels who want to:

  • Understand the different ways financial statement fraud is detected.
  • Understand changing patterns of financial statement fraud.
  • Apply risk assessment techniques to financial statement fraud detection.
  • Identify and evaluate financial statement fraud risk factors.
  • Design internal audit steps to help detect common financial statement fraud schemes.
Course Duration: 2 day(s)
CPE Hours Available: 16
Knowledge Level: Intermediate
Field of Study: Auditing


Advance Preparation: 


Delivery Format: On-site Training (Group-Live)

Internal Audit’s Role in Deterring and Detecting Financial Statement Fraud

  • Define financial statement fraud
  • Discuss how internal audit’s role in deterring and detecting financial statement fraud supports organizational objectives and assists those charged with governance

Recent Trends in Financial Statement Fraud

  • Discuss the elements of financial statements most commonly misstated or manipulated according to SEC enforcement releases
  • Describe some of the differences between key industries

Financial Statement Fraud Detection Methods

  • Discuss different ways in which financial statement fraud is detected
  • Describe the roles of different stakeholders in detecting it
  • Discuss the potential implications for internal audit methods


In each of the financial statement fraud areas below, we will discuss common schemes, potential fraud risk indicators and some potential detection measures and tests.

Revenue Recognition Manipulation

  • Recording fictitious revenue
  • Recognizing revenue despite unresolved contingencies
  • Recognizing revenue from sales billed, but not shipped (“bill and hold”)
  • Recognizing revenue despite lack of delivery, incomplete delivery, or lack of customer acceptance
  • Accounting improperly for (or failing to reserve properly against) refunds, exchanges, cancellations, refusals, or returns
  • Recognizing inappropriate revenue from swaps, round-tripping or barter arrangements
  • Others

Manipulation of Assets

  • Accounts receivable schemes
  • Inventory schemes
  • Fixed asset schemes

Manipulation of Liabilities

  • Accounts payable schemes
  • Manipulation of reserves

Improper Disclosures

  • Common schemes

Emerging Issues

  • Discuss current hot topics and emerging issues

Responding to Indicators of Potential Financial Statement Fraud

  • Identify when an internal audit should become a fraud investigation
  • Consultation with legal counsel
  • Identifying boundaries/potential conflicts

​Most courses can be delivered through on-site training. You might be surprised that the organization leading the profession is just as committed to the delivery of affordable training.

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