INTERNAL AUDITORS ROLE IN PREVENTION AND DETECTION OF FRAUD

Internal Auditors Role in Prevention and Detection of Fraud

Internal Auditors Role in Prevention and Detection of Fraud

Introduction

Corporate Governance is a hot issue on all continents. For the past months and years, more or less disturbing new(s) items dealing with corporate governance have 'emerged'. At some time it seemed as if the whole political, economic and financial world was held hostage by, and concerned with, the development of this phenomenon.

Considering the role and the position of the internal auditor within an organization, the choice of devoting a paper to the subject of corporate governance and the contribution that can be offered by the internal auditor in this domain is hardly surprising.

The mere 'extent' of the subject, however, has forced me to begin the title with 'Reflections on…' The numerous aspects of corporate governance make it practically impossible to encompass all 'angles' in one paper. The fact that not one single definition of corporate governance exists but that definitions are being formulated in view of those aspects of corporate governance the author or commentator wishes to 'elaborate' on, confirms the enormous extent of the phenomenon itself.

However, this paper is not meant to give a narrowly focused view on a subject that affects so many. On the contrary, it is meant to shed some light on different aspects, characteristics, components and issues of corporate governance, always bearing in mind the possible role of the internal auditor. This is also the reason why some aspects will be treated more thoroughly than others.

Moreover, this paper has no intention of telling the internal auditor what to do but rather to give an indication of different elements which may enable the internal auditor to contribute to what is generally referred to as 'good' corporate governance.

However, in order to fully grasp the possibilities for the internal auditor with regard to corporate governance, I found it useful to shed some light on the phenomenon of 'corporate governance' itself: its meaning, its history, its different features, its various participants, its components and a number of other aspects pertaining to the subject of corporate governance.

Taking into account my professional occupation and my present employer, a short chapter has been devoted to corporate governance and media surroundings.

The chapter dealing in particular with the role of the internal auditor lists a number of considerations regarding the possible impact of the internal auditor on corporate governance in different ways. A number of references are also made to 'regulations' by the Institute of Internal Auditors.

To end with, a number of conclusions are formulated.

In order to provide the reader with ample opportunity to study more in depth one or more items that are dealt with in the paper, a large number of footnotes have been included. Apart from providing supplementary explanation, they are primarily meant to offer links, sources and reference directions the reader may want to consult.

In view of the rapid developments of different aspects of corporate governance, including the positions and recommendations of various organizations, ...