（2006）Conducting a Pro-Active Fraud Audit： A Case Study.pdfVIP

Journal of Forensic Accounting 1524-5586/Vol.II(2000), pp. 203-218 © 2001 R.T. Edwards, Inc. Printed in U.S.A. Conducting a Pro-Active Fraud Audit: A Case Study 1 1 2 Conan C. Albrecht* , W. Steve Albrecht and J. Gregory Dunn 1Brigham Young University, Provo, UT USA 2BP Amoco Corporation, Chicago, IL USA For years, it has been argued that one of the most effective ways to detect fraud is to use the “red-flag” approach which involves identifying ‘red flags’ or indicators of fraud and follow- ing up on them to determine whether they represent fraud or are the result of other factors. In recent years, with advances in technology, using red flags has become formalized into a fraud detection method called the fraud hypothesis testing approach . This approach requires the formulation and testing of many null hypotheses, each stating that there is no fraud of a par- ticular type. This approach requires the identification of frauds that may exist in particular sit- uations, the identification of red flags that each of those particular frauds would create, and the design of customized queries to search for those specific red flags or combinations of red flags to test each of the specific fraud hypotheses. The purpose of this study is to provide empirical evidence about the plausibility of using the fraud hypo