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This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud.

The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds.

The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud.

The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations.

As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes.

The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.

In recent years, there has been considerable interest in corporate governance literature as a result of massive corporate scandals. In today’s world, almost all companies are exposed to the danger of fraud. Much work on the business risk of corporate fraud has been carried out; however, researchers still have tough discussions on the most effective methods to adopt to tackle fraud. In accordance with previous studies, it is possible to say that companies which obey the corporate governance codes to the letter can minimize the risk of fraud. The importance of this chapter lies in that it helps to explain the evidence that although the deterrent measures company can undertake may well, to a certain extent, work out the problem of fraud, they are way far from eliminating corporate crimes in establishing “corporate governance.” The latter is the key term that defines the public responsibility of corporates binding themselves to the rule of law. Corporate governance has been discussed as one of the effective ways of calling the attention of large firms to social problems and urging them to take necessary actions. The reason that companies cannot eliminate fraud is strictly linked to the evidences of critical organization studies that question the epistemic assumptions of mainstream strand of the same field. Some studies show that the subject is not rational decision-making, neither does it follow the interest, nor is it a pure homo economicus so that rationality is effective in deterring corporate frauds to a certain extent.

When FECS spins out of human intervention and regulatory control, then it can easily harm and constrain the markets as it happened on Black Friday of October 1929, resulting in the Great Depression, and the September–October 2008 Financial Crisis, when some 17 mega global investment banks ran out of control and lost close to trillion US dollars in market capitalization. This chapter defines, analyzes, classifies, and morally assesses occupational and corporate fraud, corruption and money-laundering, and their other evil forms. When we allow our choices to be driven by passion, choosing thereby to ignore or fail to investigate outcomes, the results are too often flawed and unintended, as the cases of Lehman Brothers, AIG, Freddie Mac, and Fannie May that collapsed around September–October 2008 would attest. While we should condemn abuses within the FECS, one can also seek to understand the origins and originating systems of fraud, corruption, and various forms of deceptions and chicanery, and search for remedial strategies for eradicating these ills of FECS. Several contemporary market cases of fraud, corruption, and bribery will be identified to illustrate the contents of this chapter.