The article I chose discussed a case of fraud that went on for far to
long as the individual was able to circumvent internal controls for
authorizing and recording invoices. The individual committing fraud
held $500,000 worth of late invoices so that it would appear that he
was on target with his budget. In addition he had the vendor split
invoices so that he would not need additional approval. In addition
the fraudulent individual developed a personal relationship with the
vendor going on trips together often. The individuals wife also
ended up going to work for the vendor. The fraud was discovered
because the individual was getting ready to retire and was training
his replacement. After hours of investigating by the internal
auditors they discovered the individual was fraudulent, and had lied.
I learned that internal auditors do the internal investigations for
things like fraud. Internal Auditors help develop and set policies for
fraud. Internal auditors use instances like this to improve fraud
perspective. "Internal audit has the expertise, perspective, skills, and
independence to lead in these situations" (Richards, 2016).
Internal auditors are able to catch issues such as these in the article
during the year, while internal auditors are stuck attempting to
discover things at the end of the year most likely after the issue is
resolved and new controls are put in place. While internal auditors
have a chance to help develop new internal controls, external
auditors do not have the option of spending the times to create new
internal controls.
Reference:
Richards, B., (2016, October), Fraud Findings, Internal Auditor, 73(5),
25-27, https://eds-p-ebscohost-com.ezproxy.snhu.edu/eds/pdfview
er/pdfviewer?vid=12&sid=0d13b8a0-f86d-48f4-9a38-
92f6ee62640f%40redis
