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As your company grows and changes, yesterday's controls can leave new gaps. A fraud-risk assessment helps you find them first.
A new location, a new payment platform, and a handful of new hires. Each change can make a business stronger, and each can quietly open a door your internal controls were never built to cover. That's why assessing business fraud risks shouldn't be a one-time exercise. It should keep pace with how your company operates today.
What Is Forensic Accounting?
Forensic accounting applies accounting, auditing, and investigative skills to examine financial records for evidence of fraud, errors, or misconduct. A forensic accountant goes beyond whether the numbers balance and asks how transactions happened, who approved them, and whether the documentation supports them.
Forensic accountants often support fraud investigations and litigation, but many businesses bring them in proactively for a fraud-risk assessment. The goal is an objective look at where your company is exposed to asset misappropriation, financial statement fraud, and corruption.
What Does A Forensic Accountant Review?
Every assessment should fit your company's size, industry, systems, and risk profile. Most begin with conversations with leadership and staff about how transactions are authorized, processed, and recorded, followed by a review of items such as:
- General ledger and journal entries
- Invoices, payments and bank statements
- Vendor and payroll files
- Electronic payment records and system user-access logs
- Financial reports
Management can speed things along by making records and people readily available. Stalled requests, shifting explanations, or missing paperwork are worth noting on their own.
Looking For Anomalies
From there, the forensic accountant follows the money. That may include testing for altered or missing documents, management overrides, and journal entries that don't fit normal activity or were posted by someone who wouldn't usually post them. Unreconciled accounts, differences between the general ledger and subsidiary ledgers, and an independent count of cash or inventory can all point to missing assets.
Why Payroll Gets Extra Scrutiny
Payroll is a frequent target for "ghost employee" schemes, where pay goes to a worker who doesn't exist and lands in a perpetrator's account. Helpful checks include reconciling payroll to human resources (HR) records and payroll tax filings, confirming active staff with supervisors, flagging shared bank accounts or addresses, and requiring independent approval of payroll changes.
Behavior matters, too. An employee who never takes time off or bristles at routine questions isn't necessarily doing anything wrong, but that behavior should be weighed alongside the financial evidence.
Why Early Detection Matters
The Association of Certified Fraud Examiners (ACFE) analyzed 2,402 cases for its Occupational Fraud 2026: A Report to the Nations. According to the ACFE's summary of key findings, the typical scheme ran 12 months before discovery, with a median loss of $104,000. Frauds caught within six months had a median loss of $40,000, while those lasting more than five years topped $1.1 million.
Tips were the leading detection method at 43% of cases, and employees supplied more than half of them. If your business doesn't yet offer a way for employees, vendors and customers to raise concerns, consider creating one. Strong channels are easy to use, route reports away from anyone who might be involved, protect confidentiality where possible, and prohibit retaliation under applicable law.
What If The Assessment Finds Red Flags?
Not every irregularity is fraud. Honest mistakes and poorly designed processes can create the same warning signs, and training or better controls usually resolve them.
When something looks intentional, a separate investigation may be warranted. Before confronting anyone, preserve the evidence and involve legal counsel and a qualified forensic specialist. A written investigation plan helps protect confidentiality and address employment and legal concerns. Also avoid assuming one person acted alone, since fraud can involve collusion inside or outside the company.
Turning Findings Into Stronger Internal Controls
A useful assessment ends with an action plan that assigns each fix an owner and a deadline, plus a way to confirm it works. An outside forensic accountant brings independence, but management still owns the company's controls. Revisiting the assessment periodically keeps your defenses aligned with your business as it grows. A fraud-risk assessment won't uncover every scheme, so ongoing vigilance still counts.
Talk With GBQ About Your Fraud Risks
GBQ's Forensic Dispute & Advisory Team can help you evaluate whether your current controls match the risks your business faces today. You may also find value in our Audit & Assurance resources. Contact GBQ to start the conversation.
Frequently asked questions
What does a forensic accountant do?
A forensic accountant examines financial records and processes to identify fraud, errors, and control weaknesses, and may support investigations or litigation.
How often should a business assess its fraud risks?
Periodically, and whenever the business changes significantly, such as adding locations, vendors, payment methods, or staff.
