Which of the following actions is considered a red flag in fraud detection?

Excessive employee turnover is considered a red flag in fraud detection because it may indicate underlying issues within an organization, such as poor management practices, low employee morale, or a toxic work environment. High turnover rates can create opportunities for fraud, as departing employees may take advantage of their temporary access to sensitive information or systems before leaving the organization. Additionally, constant turnover can disrupt continuity and training, resulting in a lack of oversight and accountability.

On the other hand, consistent revenue growth is generally seen as a positive sign of a healthy and thriving business, indicating that the company is performing well, which does not typically raise suspicions. Regular audits serve as a critical mechanism for detecting and preventing fraud by examining financial records and ensuring compliance with regulations, making them a reassuring practice rather than a red flag. Clear compliance procedures are established to ensure that an organization adheres to laws and regulations, which helps mitigate the risk of fraud rather than signal potential problems.