What is Fraud Deterrence?

Legal Definition
Fraud deterrence has gained public recognition and spotlight since the 2002 inception of the Sarbanes-Oxley Act. Of the many reforms enacted through Sarbanes-Oxley, one major goal was to regain public confidence in the reliability of financial markets in the wake of corporate scandals such as Enron, WorldCom and Waste Management. Section 404 of Sarbanes Oxley mandated that public companies have an independent Audit of internal controls over financial reporting. In essence, the intent of the U.S. Congress in passing the Sarbanes Oxley Act was attempting to proactively deter financial misrepresentation (Fraud) in order to ensure more accurate financial reporting to increase investor confidence. This same concept is applied in the discussion of fraud deterrence.

Until recently, fraud deterrence has not been specifically identified under one common definition. While it has been discussed by many authoritative sources such as the American Institute of Certified Public Accountants (AICPA) Practice Aid Series, “Fraud Detection in a GAAS Audit: SAS No. 99 Implementation Guide,” (explicitly) The Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control – Integrated Framework,” (implicitly) and the National Association of Certified Valuation Analysts Certified Fraud Deterrence Analyst (CFD) designation (recently merged into the Certified Forensic Financial Analyst (CFFA) designation), an actual definition of the term “fraud deterrence” has been difficult to find.
-- Wikipedia