Responsibility of Internal Audit in the Detection of Fraud Research Paper

Responsibility of Internal study in the Detection of Fraud - Research Paper ExampleAuditing is mostly of two types Internal and outer audit. The inner(a) audit team is a team appointed by the management of the smart set which aims at ensuring that the accompany is acting according to the rules and operations atomic number 18 in compliance to all type of inner and external rules. Internal audit prepares a company for an external audit by evaluating the operations and checking for imposture within manageable levels. External audit, on the other hand, is conducted by independent authorities who view as no personal concern or take in the company and are appointed by the secondment or legal authorities to check the companys operations. When an internal audit team audits, the company does not face any fine or legislation in case of fraud catching but in case of the external audit team, companies face legislation, fine and other legal processes in case of any fraud in their operat ions. Fraud in operations is one of the most occurring and high-priced issues faced by organizations. Studies show that US organizations have faced a very significant and increase proportion of fraud in their operations every year. US economy faces the highest proportion of fraud in the period of economic downturn that is because employees and management do not get money enough for their extract or many other reasons contribute. It has also been observed that proportion of fraud had been increasing with significant parcel each year since 2001 (Howe, 2009). As a proportion of fraud is increasing in the organizations, it has brought high concerns to the management. Organizations right away strive their best to lessen fraud and corruption in their operations. For this purpose, they rely heavily on the internal audit team and internal auditing activities. Internal auditor reports only to the board of directors he gets better mastery on fraud and corruption because of the fact that board of directors have a stake in the company and hence they dont tolerate any kind of fraud and dont return any other personal interest. Organizations believe that as internal auditors review the activities in depth and varan the operations independently without any personal take on them, they usually stem well in the areas where fraud is taking place. Internal audit teams get a good knowledge of the operations and organizational process over time and this is what makes it easy for them to detect any fraud happening. The internal auditors are believed to have better knowledge of the risk areas, control systems, employee profiles and this is what helps in effectively dealing with fraud in the organization. It has been utter by ACFE US that the internal audit team has detected the highest proportion fraud in organizations. The appraise elaborates that internal auditors have no concern or personal interest in the organization. Rather they are independent authorities. Contrary to them, management has a personal interest in bonuses, rewards, and promotions as well as job retention which given them the way to fraudulent behavior.