How Do I Detect Fraud as a CPA?

As Atul Bhiwapurkar CPA, I have first-hand experience of how alertness is vital in discovering fraud. With so many years of experience, I have tremendous insight into all the ways through which fraudulent maneuvers can appear in an organization or business. Whether it's a small company or a large corporation, fraud is always a sad reality, and at all times, it has to be addressed. For this purpose, here are some of the most common approaches that I use to detect fraud as a CPA.

1. Red Flags Identification

The first step to identifying fraud is by looking out for the red flags. To be candid, some of the signs may be clear as day, but many are pretty subtle. Being a CPA Atul Bhiwapurkar, I always keep looking for inconsistencies in financial records, unexplained discrepancies in the cash flows, and missing or incomplete documents. Any sudden and drastic change in the lifestyle or behavior of the employee or any change in the financial habits can also be a red flag. In this case, if one party in the organization is living beyond their means without making anything reasonable out of it, then something fishy is probably going on.

Unusual transactions, high volumes of voided sales, journal entries that seem unusual, and inconsistencies between financial and inventory records are all clear red flags. As Atul Bhiwapurkar LinkedIn emphasizes, my job is to be thorough and question anything that doesn't align with expectations, even if the explanation later seems reasonable.

2. Analysis of Financial Statements

One of the key tools at my disposal as Atul Bhiwapurkar from Milpitas, California, is the company's financial statements. Most of the anomalies or unusual patterns can be picked up on regular review and analysis. These should therefore be areas that I give special attention to, cash transactions, expense reports, or the pattern of revenue recognition.