Recently, I happened to visit the Internal Audit Department of a fortune 100 company. One thing that hit me was the change in the roles and responsibilities of the internal audit department. No longer were they only concerned with financial and operational issues. Today, the internal audit department does much more than just drive a traditional risk based internal audit plan. Fraud detection and prevention have become one of the major responsilities of the internal audit department. Let me explain why and how:

1. To begin with the internal audit department in an organization lies between the Audit Committee and the Senior Management.
2. The Top managment in an organization owns the antifraud responsibility. The audit Committee oversees the antifraud efforts. And the Internal Audit department takes up risk monitoring and serves as a watchdog for any fraud threats.
3. The internal audit plan can very well include antifraud plan to help prevent, detect and monitor fraud.
4. Finally, a mechanism can be instituted whereby any fraud related concerns / suspicions can be raised with the senior management. In short, internal audit can take up the responsibility for fraud monitoring in an organization.

More on Fraud & Sarbanes Oxley >>

>> Common Forms of Fraud - Part I
>> Common Forms of Fraud - Part II
>> Company Level Controls Vs. Company Wide Controls
>> Financial Reporting Assertions