INTERNAL AND CONTINUOUS AUDIT
- Razaee (2005) called internal audit as the first line of
defence against fraud - Previous research has proved the effectiveness of internal audit as a tool of fraud control
- Presence of internal auditors increases chances of fraud
detection (Burnaby, Howe & Mul)
EXTERNAL AUDIT
Popular fraud cases (e.g., Satyam Computers Limited) have shown that fraud remains uncovered despite audit being done by one of the big four audit firms
In the 19th century, fraud detection was considered as the primary objective of external audit (Alleyne & Howard, 2005). Later the emphasis has shifted to providing only a reasonable assurance that financial statements are free from any kind of material misstatement
Auditors are not able to detect fraud due to time pressure (Krambia-Kaparis, 2002).
CODE OF CONDUCT
Internal Control System
- It reflects an organisation’s ethical culture,
ambitions and tone of the top (ACFE, 2014). - Character of a company and shows
organisations commitment to combat fraud - Stated that strong tone of the top effectively reduces fraud probability
- Internal controls are adopted to secure the
assets of company, improving the reliability of
its accounting records, and for preventing and
detecting fraud. - Poor internal control system has been found to
be a main casual factor for any fraud case to
occur (Brennan & McGrath, 2007)
Fraud Risk Assesment
- Fraud risk assessment is an important tool for prevention and detection of fraud.PwC survey report (2011) found 14 per cent of fraud cases could be identified by risk assessment.
- Moreover, PwC (2016) revealed that the presence of various red flags such as lavish lifestyle, fake bills, missing documents and disputes with vendors may indicate risk of potential fraud.
Forensic Accounting Services
Increasing frauds and failure of auditors to detect them have given wings to the growth of forensic accounting (Razaee & Burton, 1997).
Forensic Accountants,with the combination of accounting, auditing and investigative skills (Renzhou,2011)
