The Role Of Internal Audit In Fraud Prevention And Disclosure : Literature Riview

Abstract

This study aims to determine the effect of internal audit in preventing and disclosing fraud. The number of frauds that occur in an organization shows the need for an internal audit body in the company so that it can reduce or even eliminate fraud that occurs. This literature review is a study of the role of internal audit in preventing and disclosing fraud which aims to find out the variables in internal audit for preventing and disclosing fraud based onprevious studies, so there is still a lotof potential forfurthermodification/development. Of the ten studies included in this literature review, there are differences in research results. Eight studies state that internal audit has a significant effect on preventing and disclosing fraud, but two articles state that internal audit does not have a significant effect on preventing and disclosing fraud.

Symbiotic Relationship of Internal and External Auditing in Enhancing Fraud Management: Insights from Nigerian Deposit Money Banks in Bayelsa State

“…This is in tandem with the basic objective of internal auditing which is to detect, control, and prevent fraudulent practices within the operations of the Nigerian Deposit Money Banks and this indicates that internal auditing is an effective and important tool in managing and combating fraud within Nigerian deposit money banks. This outcome agreed with the findings of Anyanwu and Okafor [3], Isiaka [8], Khairini [10], Miryam (2022), and Sepala et al [11] among others who support that effective internal audits mechanism can greatly influence the prevention and detection of fraud in the banking sectors. Also, it was discovered that external auditing has a positive significant impact on fraud management in Nigerian Deposit Money Banks.…”

“…Its primary purpose is to provide confidence to the management and board of directors that the organization's activities are both efficient and effective, and that they comply with established standards and protocols. Internal auditing can be defined as a structured and rigorous approach to appraise and enhance the efficiency of processes related to risk management, control, and governance [10].…”

“…It was proven that institutional theory, organizational support theory, and quality theory can help build a theoretical framework for the effectiveness of internal audits for fraud prevention. However, Khairini et al [10] investigated the effect of internal audits in preventing and disclosing fraud. Thematic analysis was the preferred method of data analysis.…”

The Role of Internal Audit, Internal Control, Organizational Commitment and Integrity, in Improving Optimization of Fraud Prevention at Hospitals in Sidoarjo

“…Peran audit internal adalah sebagai pengawas terhadap kecurangan. Audit internal bertanggung jawab untuk membantu manajemen mencegah penipuan dengan menguji dan mengevaluasi keandalan dan efektivitas pengendalian serta potensi risiko penipuan di berbagai segmen (Melinda et al, 2022). Berdasarkan pendapat di atas, maka hipotesis yang diajukan adalah sebagai berikut: H 1 : Audit internal berpengaruh terhadap pencegahan fraud.…”

The Impact of Internal Audit, Internal Control and Whistleblowing System on Fraud Prevention in the Indonesia Banking Companies during the COVID-19 Pandemic

“…The role of internal audit is as a supervisor against fraud. Internal audit is responsible for helping management prevent fraud by testing and evaluating the reliability and effectiveness of controls along with the potential risk of fraud in various segments (Melinda et al, 2022). The existence of internal audit in a business organization is a good control tool against errors, irregularities and fraud.…”