Which is best for fraud control? Internal audit vs External audit, Pre-audit vs Post-audit, Performance audit vs Financial audit?
I think Froud controlling starts from the inside where everyone should behave with the values.
Ethics with self regulation! Further, awareness creation also important.
In my humble opinion, I will like to posit and emphasis that the presence of all, inter alia, would go a long way for the purpose of fraud control.
For the sake of comparison, see below;
•Internal Audit over External Audit
•Post Audit over Pre Audit
•Performance {Value for money audit) over Financial Audit.
But It's true that it will undoubtedly be impracticable in practice to some extent to make preference. see Company and Allied Matter Act 2004, required company to audit(External) her Financial statements at the end of each financial period. Apparently, it will be inappropriate to select preference as regards the above issue.
Cite
Owen Dombodzvuku
Great Zimbabwe University
Internal Audit
Cite
Sathis Kumar .K
Larsen and Toubro
First it should be control by internal audit and based on the fraud voulme and size it may advise for external audit or financial audit .
Cite
Mayank Gangwani
Indian Institute of Technology Delhi
Fraud is a practice based upon cressey, Wolfe, and hermanson three fraud triangle model in which incentive, opportunity, rationalisation was being mentioned. However a fourth element capability is added to the model. This model basically talks about an individual having opportunity, motivation, capabilities and no fear of being caught usually engage in fraudulent activities. So to overcome this internal control mechanism could be adopted in any environment to keep a tab and oversight on such fraudulent activities. Apart from internal control forensic audit and forensic accountant could be employed to uncover all the frauds.
Cite
Sanjeev Bansal
I.K.G. Punjab Technical University Kapurthala(India)
No doubt, proper control, quality audit, and effective corporate governance may help, but mainly, our own ethical values will play a greater role in keeping us away from such unethical practices.
Cite
Christopher C Kelly
Kelly Partners LLP
Fraud control is management's responsibility, not audit's responsibility. Management, including Human Resources management, minimise fraud through
- recruitment and vetting,
- annual appraisal,
- corporate culture,
- internal controls,
- disciplinary procedures.
External Audit has a very narrow focus which only considers financial mis-statement fraud.
Internal Audit can support management's control measures through independent control testing which seeks fraud. The following literature available in full here on Researchgate explains in detail how it can be done:
Article Retail point of sale fraud prevention and detection using in...
Article Payroll internal audit: On the hunt for payroll fraud
Article The dollar value of error-seeking audits
Cite
Cenap Ilter
California State University, Dominguez Hills
The best way to stop fraud is to establish an internal audit department and create internal control mechanisms. It is very important that all employees conduct business according to the preestablished rules. These rules need to be tailored according to the IT infrastructure of the company. IT infrastructure should be tailored as such that it will make no difference if the internal audit was carried all manually. First the rules must be established by the internal audit department then the rules must be incorporated into the ERP system by IT department. Password operations must be run centrally. It must be made sure that no data leak would occur without authorization and there exist an audit trial for every action. Then we can say that there is sound internal controls. The transactions in all departments must be continuously tested by the internal audit department. Employees would know that every entry they make leaves an audit trial in the system with their passwords. This is a "tone at the top issue" that should be initiated by the top management. Every single department of the company must have its own business conduct rules (manuals). Internal audit should make sure that departments are run in accordance with these preestablished rules. Also, top management should declare an "ethical conduct" rules throughout the company. Ethical conduct rules together with the internal controls make up the corporate governance imposed by the top management. Board of Directors (BOD) will make sure that all these rules are being followed by through their "audit committee."
Cite
Peter Boulding
CIPFA
Initiate a management system of strong internal control (using the COSO framework) under an Audit Committee independent of executive manangement - reported to at a senior level by a professional internal audit function. All staff should be subject to ethical standards (but particularly professionals) and be fully aware of control guidance.
Cite
Hasan Mansur
Applied Science Private University
Internal control system and qualified internal auditors
Cite
Agumas Alamirew Mebratu
Bahir Dar University
prevention better than detection for weak internal control environments. Hence, pre-audit is best for those internal control structures are not effective.
Cite
1 Recommendation
Deleted research item The research item mentioned here has been deleted
Cite
Agumas Alamirew Mebratu
Bahir Dar University
prevention better than detection for weak internal control environments. Hence, pre-audit is best for those internal control structures are not effective.
Cite
Similar questions and discussions
I am writing a paper on good corporate governance and directors voluntary behavior
Discussion
4 replies
- Prem Lata
How a good corporate governance can be effective and efficient if directors involve in good citizenship behavior in organization.
What are the main determinants of the development of accounting and financial reporting?
Discussion
12 replies
- Dariusz Prokopowicz
The development of accounting and financial reporting should be correlated with technological progress in this area, i.e. should take into account the development of IT applications that are commonly used in accounting, accounting and financial reporting in business entities. In addition, in recent years, instrumentalization, standardization and computerization of conducting economic, financial, indicator, fundamental analyzes, etc. supporting reporting processes have been developing rapidly.
In addition, computerized analytics concerning the processing of data generated, among others, in accounting systems on Business Intelligence platforms are also developing. Analyzes carried out in the cloud using Business Intelligence based on data collected in Big Data database systems support financial management processes and management of the entire economic activity conducted by a specific company or financial, public, etc. institute.
Do you agree with my opinion on this matter?
In view of the above, I am asking you the following question:
What are the main determinants of the development of accounting and financial reporting?
Please reply
The issues of the use of information contained in Big Data database systems for the purposes of carrying out Business Intelligence analyzes are described in the publications:
Article APPLICATION OF DATA BASE SYSTEMS BIG DATA AND BUSINESS INTEL...
Article The Big Data technologies as an important factor of electron...
Article The Technological Solutions Big Data and the Importance of B...
I invite you to discussion and scientific cooperation
Best wishes
What statistical test to use: dependent variable is binary and independent variable is continuous?
Question
11 answers
- Brooke Brisbine
Just wondering if anyone can save me another 8 hours of headache trying to figure out what stats to run on my data..
I am trying to understand whether a number of different factors, such as age (measured continuously) and BMI (also continuously), are predictors for a certain type of pain (binary, Y/N). I have this binary data also represented ordinally (Likert scale 1-5); I have been hesitant to analyse it in this way, but if it makes the stats easier, I may consider it.
Any help would be enormously appreciated!
The Controversies: Financial Audit and Forensic Audit, are they the same??
Question
24 answers
- Oluyemi Ayodele Olonite
One of the main differences between Financial Audit and Forensic Audit is that the Financial Audit gives the guarantee that the financial statements that have been checked are true and fair and are reasonable whereas, Forensic Audit helps to analyze and investigate a certain set of transaction, if any fraud has been occurred.
The goal of this project is to set the record straight as much focus have been on the Financial Audit as the Fraud Detector.
The questions are: 1. Who then is the Fraud Detector, a Financial Auditor or a Forensic Auditor?
2. Why are Financial Auditors liable if failed in their audit duty to detect fraud within an organization?
What are the roles of internal and external audit in preventing and detecting financial statement fraud?
Question
6 answers
- Hamuda Alshokry
The role of internal and external audit to prevent and detect financial statement fraud.
How can external and internal audit prevent and detect fraud in financial statement.
Is there any prior study explaining the significance of continuous learning for internal audit?
Question
4 answers
- Mustafa Hasan
I wanna know if the continuous learning influence the internal audit effectiveness
Any audit implications and cost benefits on using XBRL?
Question
10 answers
- H Gin Chong
Dear all,
An increasing number of listed firms are using XBRL in the reporting process.Would this complicate the audit approaches and audit implications?
Also, in the auditees' perspectives, what is the costs-benefits of using XBRL? Please share your views, experiences and thoughts, thanks
Background:
Since 2004, the Securities and Exchange Commission (SEC) expects firms to use eXtensible Business Reporting Language (XBRL) to file their reports. This helps tag a firm’s financial information using a computer readable and searchable engine. Investors are demanding assurance on the tagging process but the Public Company Accounting Oversight Board (PCAOB) has yet to issue a guidance on attesting the engagements regarding XBRL financial information furnished under the SEC’s current voluntary filer program, which relies on the auditor agreeing a paper version of the XBRL-related documents to the information in the official EDGAR filing. This approach is deemed adequate for the current paper-oriented reporting paradigm but once the filing in XBRL becomes mandatory, this will affect the way financial and non-financial data are reported, used and attested. The current audit focus on reconciling only the XBRL output with the paper submissions may not completely address this paradigm shift and may add costs to the rising audit costs and delays of issuing audit opinions.
Could you please share your country (world) requirement in relation to Internal Audit Function (IAF) arrangements (In-house or out-sourced)?
Question
6 answers
- Saeed Baatwah
Recently, many of capital market authorities (e.g. New York Stock Exchange; Malaysian Securities Commission) require listed companies to establish internal audit function, as result of preceding corporate fraud (e.g. Enron). In practices, this function is performed either by company's employees or by external provider (other than the company's external auditor). Therefore, I will be grateful if you can state whether listed companies in your country (or other countries based in your knowledge) are required to have entirely in-house IAF or optional (entirely in-house, entirely out-sourced or co-sourced). Thank you.
Related Publications
Internal audit. Called to account
Article
- Andy Wynne
Tap your internal audit department to support capital management
Article
- Steve Womack
Internal audit. Much more than "a necessary evil"
Article
- T Rippington
Got a technical question?
Get high-quality answers from experts.
Top contributors to discussions in this field
Ljubomir Jacić
Hazim Hashim Tahir
Nidhal Kamel Taha El-Omari
Rob Keller
Mariano Ruiz Espejo
Join ResearchGate to find the people and research you need to help your work
- 25+ million members
- 160+ million publication pages
- 2.3+ billion citations
or
- Join for free
- LoginEmail Tip: Most researchers use their institutional email address as their ResearchGate login
PasswordForgot password?
Keep me logged inor
Continue with Google
Welcome back! Please log in.
Email · HintTip: Most researchers use their institutional email address as their ResearchGate login
PasswordForgot password?
Keep me logged in
or
Continue with Google
No account? Sign up
- Badges
- Science topic
- Similar topics
- Methodology
- Research Methodology
- Research Papers