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The internal auditor has manynimportant roles with regard to fraud in all its stages from prevention, detection until the investigation stage (if fraud occurred), I will limit my answer to the primary role as mentioned on your kind question. The internal auditor employs analytical procedures and other tools to find unusal items, and performs detailed analysis of high risk accounts and transactions to identify potential fraud. Also the internal auditor uses the computer assisted audit techniques, including data mining to detect particular types of fraud. The internal auditor has a better understanding about the company and its control system and can assist in identifying fraud risks by evaluating and testing the adquacy and effectiveness of internal control.
While doing risk assessment, IA need to be aware about fraud risk and take fraud risk into account into assessing a risk profile of an entity, a division and a process.
Your Heat Map need to reflect your assessment of fraud risk. This automatically ensures that a fraud risk prone is getting assessed at an appropriate level.
Having said that, fraud occurs due to an opportunity presented. There can be hundreds of reason because of which opportunity arises.
Responsibilities for FD:
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The internal auditor reviews the operations and performs such functions as evaluation, compliance, verification ensure and ensures that policies, procedures, rules and other type of controls of the business are carried out efficiently.
The internal auditor points out irregularities in the procedural aspects and suggest ways and means to rectify the same. He assures that the financial operations and other types of control in force are carried out in conformity with the accounting systems.
In short the internal auditor has a big hand in the prevention and detection of fraud in the company.
1st We should remember that primary responsibility of fraud detection lies with the those charged with governance while internal auditor is responsible to ensure sound system of controls exists to detect fraud in normal course of business. Controls testing are the main weapons that IA use to fire while detecting fraud , apart from other literature like professional skepticism, watch dogs, alertness with question mind. If system of internal controls and risk management does not exist than its also responsibility of IA to document this system and update it to the Audit committee.