Abstract

An internal audit is an independent appraisal of a certain activity or department within an organization. The internal audit function maintains its independence within the organization by reporting to the audit committee of the board of directors. The principles that internal auditors are expected to apply and uphold are fundamental to the profession and practice of internal auditing. Standards outlining the expected behavior of internal auditors are essential for both the auditors themselves and the entities that provide internal audit services. Their overarching purpose is to foster an ethical culture within the global internal auditing profession. Auditors must be vigilant regarding fraud that may affect the audited financial statements. Fraud primarily occurs in two forms: misrepresentation in financial statements and the misuse of organizational resources. From the perspective of financial reporting, misstatements may arise from either error or fraud, with the distinction between the two depending on the intent of the individual whose actions caused the misrepresentation. As a legal concept, financial fraud represents a particular form of corruption, the elements of which are widely recognized internationally. Corruption, by contrast, encompasses a broader range of behaviors that manifest in various ways and are shaped by the cultural and ethical norms of each society. Despite these differences, there exist several common strategies for combating both financial fraud and corruption.

JEL: H83, M42