Position Paper Clarifies Internal Audit Roles in Fraud Prevention and Response
The Institute of Internal Auditors (IIA) announced today the release of a new Position Paper, “Fraud and Internal Audit: Assurance Over Fraud Controls Fundamental to Success.”
The new paper describes specific internal audit responsibilities regarding fraud prevention and detection. Internal auditors must have sufficient knowledge of fraud to evaluate fraud risk and the manner in which it is managed by the organization. However, the paper also points out that, while some internal auditors may investigate fraud, organizations should not expect an internal auditor to have the expertise of a person whose primary responsibility is fraud investigation.
Fraud investigations are best carried out by those experienced to undertake such assignments. It is essential that any investigation is undertaken by qualified individuals to reduce the risk of compromising evidence, accusing wrongfully, or undermining prospective legal actions.
According to the Position Paper, every organization should have an anti-fraud response plan that outlines key policies and investigation methodologies. The plan should make clear the role of internal audit when there is suspected fraud and associated control failure.