Fraud Detection : The Value Of Internal Control

6023 Words Aug 8th, 2015 25 Pages
EMPIRE STATE COLLEGE
OF THE
STATE UNIVERSITY OF NEW YORK

AUDITING FINAL PAPER

FRAUD DETECTION: THE VALUE OF INTERNAL CONTROL

by

OLUIMI AKINDEINDE

2012 Abstract Fraud is present in all aspect of life. It is very common in business environment. Business organizations try to do their best to ensure that fraudulent practices do not put them out of business. Case study is used to establish the value of internal anti-fraud control and to point out that a small business can implement it with common sense and solid auditor’s advice.

Introduction
Occupational fraud poses a large threat to small businesses (ACFE, 2012). Research data suggests that the smallest organizations suffered disproportionately the largest median losses, and this is because small organizations were victimized by fraud more frequently than larger organizations (p. 17). The loss suffered by organizations, whether small or large, has been linked to the type of anti-fraud controls and the level of fraud detection mechanism they have in place, and it organizations with an internal audit function are said to be more likely than those without such function to detect fraud within their organizations (Coram, Ferguson, & Moroney, 2006). This study explores and investigates the value of internal control in a small business.

Background
Small businesses cannot afford to allow fraud to take place in their establishment for one simple and obvious reason; they will quickly be out of business.…
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