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The escalating relevance of internal auditing as anti-fraud control

Hans-Ulrich Westhausen (ANWR GROUP eG, Mainhausen, Germany)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 2 May 2017

2158

Abstract

Purpose

The purpose of this paper is to discuss critical success factors for the enormous development that internal auditing (IA) as “third line of defense” (IIA, 2016) and one of the strongest anti-fraud controls has reached within the past decades. Additionally, weaknesses of IA are identified and evaluated to allow further improvement.

Design/methodology/approach

The anti-fraud requirements stipulated in the “International Standards for the Professional Practice of Internal Auditing” are confronted with empirical data about the current situation of the IA as anti-fraud control. The empirical data were extracted from global sources such as “Fraud Reports” (Association of Certified Fraud Examiners – ACFE) and “common body of knowledge (CBOK)” studies. The Institute of Internal Auditors (IIA).

Findings

Over the years, IA has been continuously increasing its auditing quality and effectiveness with new analytical methods, specialized software tools and professional certifications. But all these efforts have hardly been reflected in statistical or research data, especially not in the listing of the top sources of fraud detection. The “ACFE-Fraud Report 2016” revealed that IA is now – for the first time ever – second among the initial detections of occupational frauds (financial statement fraud, corruption and asset misappropriation) worldwide. This positive trend of global anti-fraud auditing was probably no “one-hit wonder”, but a result of a lengthy process of professionalization of IA.

Originality/value

It is hoped that this paper will facilitate the discussion about the value that IA can add within an anti-fraud management system.

Keywords

Citation

Westhausen, H.-U. (2017), "The escalating relevance of internal auditing as anti-fraud control", Journal of Financial Crime, Vol. 24 No. 2, pp. 322-328. https://doi.org/10.1108/JFC-06-2016-0041

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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