Internal audit, alternative internal audit structures and the level of misappropriation of assets fraud

Abstract

In recent years, the importance of good corporate governance has received significant public and regulatory attention. A crucial part of an entity's corporate governance is its internal audit function. At the same time, there has been significant public concern about the level of fraud within organizations. The purpose of this study is to assess whether organizations with an internal audit function are more likely to detect and self-report fraud than those without. In this study, we use a unique self-reported measure of misappropriation of assets fraud for the first time. The fraud data are from the 2004 KPMG Fraud Survey, which reported fraud from 491 organizations in the private and public sector across Australia and New Zealand. The internal audit data are from a separate mail survey sent to the respondents of the KPMG Fraud Survey. We find that organizations with an internal audit function are more likely than those without such a function to detect and self-report fraud. Furthermore, organizations that rely solely on outsourcing for their internal audit function are less likely to detect and self-report fraud than those that undertake at least part of their internal audit function themselves. These findings suggest that internal audit adds value through improving the control and monitoring environment within organizations to detect and self-report fraud. These results also suggest that keeping the internal audit function within the organization is more effective than completely outsourcing that function. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 AFAANZ.

Corporate fraud culture: Re‐examining the corporate governance and performance relation

“…Data extracted from the 2002, 2004, 2006 and 2008 KPMG fraud survey comprise the sample. These data have been used in prior research (Coram et al, 2008;and Chapple et al, 2009).…”

“…First, although the relation between corporate governance and the likelihood of fraud has been previously analysed in the Australian context (Sharma, 2004;and Chapple et al, 2009), this study by combining the unique KPMG Fraud Survey data with the ASIC fraud filings and media releases constructs a comprehensive database of both self-reported and externally detected instances of fraud in sample firms. An acknowledged limitation with the KPMG fraud data is that it relies on self-reported fraud (Coram et al, 2008;and Chapple et al, 2009). Second, the corporate governance and firm performance relation is examined within a sample of firms that have experienced at least one instance of fraud.…”

Analisis Empiris Pengaruh Efektifitas Komite Audit, Efektifitas Internal Audit, Whistleblowing System, Pengungkapan Kecurangan dan Reaksi Pasar

“…Struktur tata kelola perusahaan yang berperan besar dalam penerapan whistleblowing system adalah komite audit dan audit internal (Davidson et al 2008 ;Coram et al 2008). Dengan dukungan peran struktur tata kelola perusahaan diharapkan whistleblowing system dapat menjadi mekanisme yang efektif dalam mengungkapkan kecurangan di perusahaan (Davidson et al 2005;Coram et al 2008;Ali 2014).…”

Алати Интерне Ревизије За Оцјену Квалитета Корпоративног Управљања

“…Слично томе, професионална тијела (AICD et al 2008) предлажу да се функција интерне ревизије понаша као агент одбора за ревизију и обезбјеђује увјеравање одбору за ревизију у вези са интерним корпоративним управљањем, управљањем ризицима, интерним контролама и усклађеношћу. Постоје и студије које су такође допринијеле сагледавању већег значаја интерне ревизије и њене способности да допринесе квалитету корпоративног управљања, и то кроз своју улогу надгледања, унапређивања контрола и надзора, као и способност да ублажи ризик од проневјере (Beasley et al 2000;Coram et al 2008).…”