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Fraud Detection Resources for Contract Auditors

This page is the central location for resources to promote and increase fraud awareness when performing contract audits. The goal of these resources is to facilitate and enhance an auditor’s ability to:

  • understand fraud vulnerabilities in contract audits;
  • perform effective fraud risk assessments;
  • detect instances of potential fraud or irregularities; and
  • write useful fraud referrals.

We encourage constructive feedback on these resources. Please email your comments and suggestions to

 

CAPOFraudResourcesFeedback@DoDIG.mil

 

Comprehensive Listing of Fraud Indicators

 

The Comprehensive Listing of Fraud Indicators by scenario groups all the available scenario-related resources in one document. It includes the indicators related to each of the scenarios and links to information about general fraud indicators and management-related fraud indicators that can potentially impact any audit.

Contract Audit Fraud Scenarios

The fraud scenarios listed below use audit situations to illustrate the relationship between potential fraud indicators and audit procedures throughout the entire audit process. They are meant to stimulate critical thinking in identifying and addressing fraud indicators and making fraud referrals.

The Comprehensive Listing of Fraud Indicators can be used for quick reference. However, auditors should at least initially review the full scenarios as they provide valuable information including:

  • examples of analytical procedures;
  • suggested management inquiry questions and related auditor responses;
  • expanded audit procedures to address potential indicators;
  • general comments on the scenario subject matter; and 
  • fraud indicators.

Scenarios with a Focus on Internal Controls

 

The fraud scenarios listed below illustrate the relationship between fraud indicators and internal control weaknesses in the contract environment. 

Internal controls are emphasized in both the Government and the private sector through the following standards:

  • For the Government, the updated Government Accountability Office (GAO) Standards for Internal Control in the Federal Government (Green Book), and
  • For the private sector, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control - Integrated Framework.

The fraud scenarios are meant to stimulate critical thinking in identifying and addressing fraud indicators related to internal control weaknesses. Some questions to answer regarding internal controls:

  • Does management have an internal control framework?
  • Is management adhering to their internal control framework?
  • Is management’s internal control framework operating effectively?