Internal Auditing: History, Evolution, and Prospects

https://ecommons.udayton.edu/books/1028/thumbnail.jp

Research Opportunities in Internal Auditing

Focuses on the book Research Opportunities in Internal Auditing, edited by Andrew D. Bailey Jr., Audrey A. Gramling and Sridhar Ramamoorti. History, evolution and prospects of internal auditing; Internal audit function; Auditing risk assessment and risk management processes

Fraud

Entry in the SAGE Encylopedia of Criminal Psychologyhttps://ecommons.udayton.edu/books/1038/thumbnail.jp

Fraud: The Human Factor

Eighty percent of respondents to a National Association of Corporate Directors (NACD) survey of public company audit committees felt that failure resulting from poor risk management couldn\u27t happen to them. However, 50 percent thought it could happen to other companies. This feeling of relative invincibility is similar to the statistically impossible Lake Wobegon effect--where all the women are strong, all the men are good-looking and all the children are above average. Could this Lake Wobegon effect--which results from the human tendency to overestimate one\u27s achievements and capabilities in relation to others--extend to an organization\u27s assessment of its vulnerability to fraud risk? Fraud is a human endeavor, involving deception, purposeful intent, intensity of desire, risk of apprehension, violation of trust, rationalization, etc. So, it is important to understand the psychological factors that might influence the behavior of fraud perpetrators. The rationale for drawing on behavioral science insights is evident from the intuition that one needs to think like a crook to catch a crook. Many business professionals, especially those in the finance arena, tend to discount behavioral explanations. But as the incidence of fraud continues to grow, placing the spotlight on behavioral factors may be an important approach to not only fraud detection, but to deterrence as well. The 2006 Report to the Nation issued by the Association of Certified Fraud Examiners (ACFE) noted that U.S. organizations lose almost 5 percent of their revenue to fraud, and that the Gross Domestic Product (GDP)-based annual fraud estimate for the U.S. was a whopping $652 billion. In light of such sobering statistics, it behooves each and every organization to understand the root causes of fraud and proactively manage fraud risk

Risk Consumption

Understanding the difference between risk appetite and risk tolerance can deter organizations from digesting too much risk. The concepts of risk appetite and risk tolerance were introduced in 2004 in The Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management–Integrated Framework. Specifically, COSO defines risk appetite as “the amount of risk — on a broad level — that an entity is willing to accept in pursuit of value.” Naturally, organizations will have different risk appetites depending on their industry, management philosophy, operating style, culture, and objectives. Therefore, a range of appetites potentially exist for distinct risks, which may change over time. It is conceivable that organizations with separate business segments with various operations or subsidiaries operating in differing industries will have varying levels of risk appetite. In pursuing diverse business objectives, organizations should broadly understand the risk they are willing to undertake

Continuous Controls Monitoring Can Help Defer Fraud

The biannual survey of the Association of Certified Fraud Examiners (ACFE) found that US organizations lose an estimated 7 percent of annual revenues to fraud. Based on corresponding United States GDP figures from the World Bank, this percentage indicates a staggering estimate of losses — around $994 billion — among U.S. organizations, despite increased emphasis on anti-fraud controls and recent legislation to combat fraud. As the survey suggests, almost every large and small organization is potentially susceptible to fraud risk, both internally from employee theft and corruption and externally by vendors and other third parties engaged in fraud against the organization. The recent spate of corporate governance failures further underscores the need to establish strong anti-fraud programs and controls

Procurement Fraud & Data Analytics

The purpose of this article is to bolster the government auditor\u27s ability to detect procurement fraud through the use of information technology (IT) tools in performing more sophisticated data analytics and effective audit testing. The article primarily focuses on fraud detection. The government auditor should customize the application of general fraud detection principles to specific facts and circumstances and use sound professional judgment. Procurement fraud detection tests may help identify fraudulent activity and also inefficiencies, waste and abuse

Public Corruption: Causes, Consequences & Countermeasures

The article discusses the cause and consequences of public corruption in the U.S. It mentions several countermeasures against public corruption which include strengtening the organizational commitment, behaviour, and emphasizing code of ethics. The article also mentions the conflict of interests, challenges on law enforcement, and asset misappropriation

Promoting and Supporting Effective Organizational Governance

Internal audit’s role in organizational governance has become increasingly important in the wake of the recent global financial crisis and the continuing spate of governance failures in both financial and public sectors throughout the world. Informed observers and commentators have asked initially, “Where were the external auditors?” then “Where was the audit committee?” and finally, “Where was internal audit in all this?” This report draws on survey responses from internal auditors in 166 countries to take stock of the current role of internal audit in the governance process and learn how internal audit can better position itself to contribute to effective organizational governance

Research Opportunities in Internal Auditing

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