Question

In: Accounting

Discuss internal audit’s role for detecting and preventing corrupt practices within an organization, as well as...

  1. Discuss internal audit’s role for detecting and preventing corrupt practices within an organization, as well as the importance of ensuring that management has effective systems in place to detect and prevent corrupt practices.

Solutions

Expert Solution

The roles that internal audit undertake for detecting and preventing corrupt practices within an organization are:

Investigating the causes of illegal acts;
• Reviewing prevention controls and detection processes put in place by management;
• Making recommendations to improve those processes;
• Advising the audit committee, if any, legal advice should be sought if a criminal investigation is to proceed;
• Bringing in any specialist knowledge and skills to assist in investigations, where appropriate and requested by management;
• Liaising with the investigation team;
• Responding to whistleblowers;
• Considering the risk associated with corruption in each audit;
• Having sufficient knowledge to identify the indicators of fraud and corrupt practices

Every organisation faces risks arising from corrupt practices, such as bribery and fraud.
Corruption can lead to financial losses, false information, poor decision-making and reputational damage of the organization.

Organisations need a strong programme of internal controls to combat corruption that includes top level commitment, raising awareness, measures to prevent, detect and manage the damage arising from corrupt practices, and a risk assessment process to identify the risks of corruption within the organization.

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