An internal audit is a term generally used to refer to the systematic review of the systems and operations of an organization to ensure that the objectives of the organization are met. In doing so, it has a specific role in the control of processes and their governance through the process of thorough evaluation and improvement of risk management effectively (Griffiths, 2016). One of the main risks in a company is fraudulent practices which cause a risk to the organization’s resources, the damages caused, its competitiveness in the industry and its reputation. An internal audit competency, therefore, evaluates these risks and the potential for their occurrence and the measures carried out to manage the risk of fraud and its prevention[A1] . The internal audit methodology is the step-by-step process of the audit from the initial risk assessment planning phase to the final phase where the results of the audit are communicated. The process chosen is one that ensures effective utilization of the allocated auditing resources. At the end of the audit time frame, a formal report is provided which gives the reasons for the audit, the time frame of the audit, the notes and conclusions of the audit, and the recommendations for improving the methods of control. The audit report considers the confidentiality of individuals, the legal requirements, requirements of the management board, and the organization’s policies and procedures. [A2]
In sum up, this project will be divided into three research papers cover the fellowing topics;
i. Internal auditor’s competence and fraud prevention
ii. Internal audit methodology
iii. Internal audit reporting
An internal auditor can take regular steps to ensure that there is fraud prevention in the organization. He or she can prevent fraud in financial statements by taking the appropriate factors of violation and non-compliance in the organization and having a proper system for detecting such fraudulent practices (Mousa, 2017). Some of the factors taken into consideration include; control of the organization’s environment, effective communication and information sharing, implementation of the fraud risk evaluation processes, control of specific activities and processes, and follow-up activities. Apart from the process itself, there is a need for a competent auditor in the prevention of fraud. A competent auditor has a role in the degree to which they seek to detect the fraud in the organization. This is also important in ensuring that they are not corrupted or compromised in their reporting of fraudulent practices. Otherwise, this would be an increased risk to the organization due to the coverup of fraud which could be detected by external auditors or even lead to the failure of the company. Finally, the competence and independence of the auditor affect the financial quality reporting. A competent auditor will have the ability to be innovative and show a mastery of skills while at the same time acting in a professional manner especially in the detection of fraud through proper communication and commitment[A4] . In the same breath, Aman (2016) states the independence in mind and appearance will help in ensuring there is autonomy and professional decision making of the auditor by maintaining objectivity and integrity in their work. Hence, the competence and independence of the auditor help maintain a high standard of quality in the financial reporting. This project will be a deep study of the internal auditor’s aspects to find out how to enable internal auditors to be more efficient in a dynamic business environment to prevent fraud, improving their methodology and providing reporting quality.[A5]
Specific Questions addressed
The research question for this project is:
How internal audit can play a role in fraud prevention?
This question is sub-divided into following questions (each question represent different paper)
1. What competences internal auditor need to prevent fraud?
2. What type of methodology the internal auditors should use to prevent fraud?
3. How should the internal auditor reporting be adapted to prevent fraud?
Innovative Aspects of the Project ( ~500 words)
In internal audit and fraud prevention, there is a need for constant innovation of the internal auditors to ensure that they meet the expectation of their stakeholders while at the same time being as dynamic as the industry environment. This is aimed at performing the required actions with the allocated tight budgets, rapidly changing demands on competency, and limited personnel. This is in consideration that internal auditors need to identify obstacle and developing changes that are likely to affect the organization’s processes and restructuring to accommodate these changes. The innovation of internal audit can follow various frameworks that can be combined to initiate change such as; customer engagement, profit model, product system, product performance, and brand. The innovation process is aimed at producing more efficient and more accurate auditing processes. This can involve the use of technology for control process such as the use of analytics and robotics for process analysis. If such technology could be utilized in routine processes, this allows for the freeing up of time to perform other functions that are more crucial to the organization’s growth, survival and success.[A6]
The main aim of management research is to conduct research in an organization and use the results obtained to solve the problems and improve the management processes and knowledge. Internal auditing as a way of detecting and preventing fraud is relevant to management research since it helps in the identification of ways of improvement of an organization. Internal audit is relevant in such a field in that it evaluates the risk evaluation and control. Thus, it tries to ensure that the operations of the organization are running in optimal capacity while at the same time helps in the identification of opportunities that can be utilized in the future. Internal audit also helps in reducing fraud which is an inevitable risk in an organization. This is done through the evaluation and optimization of the control measure of fraud. Such risks include the detection of corruption in the company, embezzlement o organization resources, and misuse of organizational assets. Hence, the relevance of internal audit in fraud prevention in management research.[A7]
State of the Art (~450 words)
The state of the art in internal audit is meant to address the best and most current methods in internal auditing and fraud prevention that can be utilized. This is aimed at identifying the best practices that can be utilized in a world of constant technological advancement. Some of the questions asked to include;
a) What are the best and most common approaches, tools, and methodologies that can be used in creating a world-class internal audit? How can such best practices be distilled and refined to produce better percentages in fraud detection?
b) How well are the internal audit functions aligned with the goals of the organization in a case where they are depended upon to act as change agents?
c) How can internal audit specialization be used in optimization of its function to mitigate the impacts of technological change and globalization of organizations?
d) How effective are the control processes and standards in an organization in influencing good practices? How can internal auditing act as a measure in improving its quality of performance?
All the above questions are aimed at creating an internal audit organization that produces state of the art results and ensures the success of the organization.[A8]
The methodologies utilized in the research on internal audit will be through questionnaires as the main form of data collection. In this case, the main subject area is the internal audit competence. The population will be internal auditors, external auditors, and management personnel. The questionnaires will be mainly close-ended to avoid bias and unquantifiable data. The purpose of using the questionnaires is to maintain the privacy of the people providing their views. This would allow for open communication without an introduction of bias due to fear of detection. The aim of the questionnaires would be to collects the main competencies of internal auditors, the fraud detection and prevention processes in various organizations, the effectiveness of traditional and upcoming frameworks of fraud detection and prevention, internal auditors rate of fraud detection in comparison to external auditors, importance of internal auditors competence and independence in producing quality audit reports, methods of change in internal audit departments to adapt to changing environments, rate and methods of innovation in fraud detection, technological utilization in organizational control processes, and rates of fraudulent practices in organizations and their detection.
The data collected will then be collected and grouped according to the specific data groups aimed at being collected. The outliers from the data collected will also be recorded and utilized in the analysis of the data. The data collected is mainly quantitative in this research and the recording of data will be collected as so. The data analysis methods will include the utilization of analysis graph, tables to describe the data collected, and percentage quantification of the data collected. The possible limitations in the data collection process include the possibility that the person filling the questionnaire might not give accurate information, out of imagination. There is also the possibility that the data collected does not give a full view of the factors in the industry.
The work plan will of the research program be spanning over a period of 4 years. The project is divided into three major parts; internal audit competency and fraud prevention, internal audit methodology, and internal audit and reporting quality.
I aim to finish “internal audit competency and fraud prevention” paper this year as I already started working on it at the beginning of this year. Afterward, I will start writing the next research paper “Internal audit methodology”, and finally, the internal audit and reporting will be completed in the last year.
Keep in your mind that fraud detection and prevention is typically not a main task for Internal auditors. However, the auditors can actively help to improve the internal control which helps to prevent fraud
[A2]Delete it. Not relevant!
[A3]In this section you should write about the following:
1. Why is this topic important ?
2. What make your study unique ?
3. How does your studies fit into the existing literature?
4. What will be the forms of each of the 3 papers?
Support everything with scientific references!
Delete it !
[A5]Delete it !
Here you should describe the innovative aspects of each paper
And support them with scientific references
[A7]Add the references!!