Internal auditor are individuals employed or hired by management of the entity to help management to monitor internal control system and mange and control risk. One of the purpose of internal control is to help management to detect, prevent and correct misstatement in the financial statement caused by either fraud or error.
The following are responsibilities of internal auditors for the prevention, detection and reporting of fraud and errors;
- Prevention and detection – it is likely that the internal auditors have a role both in prevention and detection of fraud. Indirectly they play a role in their involvement with internal controls of the business, which are set up to limit risks to the company, one of which is fraud. Directly they may be engaged by the directors to carry out tests when fraud is suspected, or routinely to discourage such activity. However if serious fraud is suspected, a company may bring in external experts, such as forensic accountant or the police
- Reporting – if internal auditors discover issues which make them suspect fraud, they will report it immediately to their superiors, who will report it to those charged with governance. In the event that internal auditor suspect top level fraud, he may make disclosure to the relevant authorities in the public interest.
We hope that you have found this article useful. if you have any question or idea you would like to share with us, please add them to the comment below.