This guide discusses the fundamentals of fraud and the role that internal audit plays in the detection and prevention of fraud.
The objectives of this guide are to raise awareness about internal audit’s responsibilities related to fraud detection and prevention, to help auditors recognize fraud red flags, and to highlight basic fraud audit techniques. In addition to covering a variety of fraud audit topics, this guide also outlines an anti-fraud program based on the three principal lines of defense, wherein the first line includes a code of conduct and business ethics policies, the second line includes an internal control structure, and the third line includes internal audit activities.
Common embezzlement schemes include:
- Utilization of fictitious vendors
- Submission of unauthorized travel and expense reports
- Submission of requests with insufficient documentation
- Fictitious customers
- Manipulation of bank reconciliations and cash books
- Use of suspense accounts or other prepaid accounts
Checklists & Questionnaires
Entity-Level Controls Fraud Questionnaire
Common Fraud Scenarios Guide