Motivations of Fraud Deterrence and the Transition to Investigation

Fraud deterrence engagements play a central role in the assessment of internal controls. While many in management believe that such a role is fulfilled by both the internal audit department and third-party audits, fraud deterrence is not the primary goal of either function. Fraud deterrence engagements have a specific place in the organization, above and beyond the functions of internal and external audits. Deterrence and investigation are complimentary processes, and frequently intertwined. This chapter details not only the motivation behind fraud deterrence engagements, but also the pitfalls associated with them and methods to ensure success, should an investigation end with a courtroom trail.