Are External Audits Effective in Preventing Fraud?
Question
Organizations that had external audits actually had higher median losses and longer lasting fraud schemes than those organizations that were not audited.
Answers
Explanations
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A. B.A
The statement suggests that external audits may not be effective in detecting and preventing fraud in organizations, and that organizations that undergo external audits actually have higher median losses and longer lasting fraud schemes compared to those that do not undergo audits.
However, it is important to note that the statement is a generalization and may not hold true in all cases. The effectiveness of external audits in detecting and preventing fraud largely depends on various factors such as the scope of the audit, the quality of the audit team, and the level of fraud risk in the organization.
Moreover, it is possible that organizations that have experienced fraud or suspected fraudulent activities may be more likely to undergo external audits. In such cases, the higher median losses and longer lasting fraud schemes may not necessarily be attributed to the audit itself, but rather to the underlying factors that led to the fraud.
Therefore, without further information and analysis, it is difficult to determine the accuracy of the statement. It is important for organizations to conduct regular fraud risk assessments and implement appropriate measures to prevent and detect fraud, in addition to undergoing external audits.
