ABSTRACT
Internal auditors to thoroughly examine every transaction and activity exhaustibly. Instead, internal auditors must learn about anomalies and search for them during the course of their work. Some of these anomalies will indicate the potential for fraud, and hence they are regarded as fraud red flags. For example: No vacations, periodic rotations, or transfer of employees. Limited communication of penalties for fraud. By not having, or enforcing the organization's zero-tolerance policy, management is indirectly tolerating fraudulent behavior. Research on committed frauds often show that the perpetrators' lifestyles change as they spend their ill-gotten gains on cars, houses, jewelry, trips, and entertainment. Fraud red flags are high-risk dynamics that could indicate the presence of fraud. When fraud red flags are present, internal auditors should exert additional care, and review related transactions and conditions to determine if there is additional cause for concern and investigation.
