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​Position Paper Clarifies Internal Audit Roles In Fraud Prevention and Response

Fraud and Internal Audit: Assurance Over Fraud Controls Fundamental to Success

LAKE MARY, Fla. (April 3, 2019) — The Institute of Internal Auditors (IIA) announced today the release of a new Position Paper, “Fraud and Internal Audit: Assurance Over Fraud Controls Fundamental to Success.”

The new paper describes specific internal audit responsibilities regarding fraud prevention and detection. Internal auditors must have sufficient knowledge of fraud to evaluate fraud risk and the manner in which it is managed by the organization. However, the paper also points out that, while some internal auditors may investigate fraud, organizations should not expect an internal auditor to have the expertise of a person whose primary responsibility is fraud investigation.

Fraud investigations are best carried out by those experienced to undertake such assignments. It is essential that any investigation is undertaken by qualified individuals to reduce the risk of compromising evidence, accusing wrongfully, or undermining prospective legal actions.

According to the Position Paper, every organization should have an anti-fraud response plan that outlines key policies and investigation methodologies. The plan should make clear the role of internal audit when there is suspected fraud and associated control failure.

The paper also provides key questions that boards of directors and other governing bodies should ask their organizations regarding fraud:

  • Does the organization have a fraud response plan in place that outlines key policies and investigation methodologies?
  • Who carries out fraud investigations within the organization?
  • Is internal audit tasked with identifying where fraud risk is present, and does it audit controls in these areas?
  • When fraud has occurred, does internal audit investigate to understand how the controls failed and how they can be improved?
  • Is internal audit tasked to investigate fraud, and, if so, does it possess the proper skill sets to carry out such investigations?

To access this and other IIA Position Papers, visit The IIA’s website.

About Position Papers

The IIA promulgates Position Papers on key issues of interest to stakeholders and practitioners with the aim of advocating for sound governance and educating those involved in it. The positions outlined offer insights into various aspects of the governance process and internal audit’s vital role in improving governance at all levels and adding value to the organization. Position Papers are developed and reviewed through a rigorous process that solicits input and critique from practicing internal audit professionals and other IIA volunteers who serve on The IIA’s Global Advocacy Committee, IIA Standards Board, and The IIA’s Professional Responsibility and Ethics Committee.