Internal Audit Risk Assessment in the Function of Fraud Detection

Abstract We are witnessing an increasing frequency of illegal actions and fraud in the business of legal entities, which directly reflects on the quality of information presented in financial statements. Internal audit does not primarily deal with the audit of financial statements, but through verifying the application of accounting policies and procedures it helps to gain reasonable assurance that the financial statements are reliable and that they are presented fairly. The role of internal audit in the fraud detection process is reflected in the fraud risk assessment in the internal audit planning process, and through performing work engagements to detecting them. In this paper, we will present risk assessment techniques, which the internal auditor can apply in quantitative and qualitative assessment of fraud risk, and in identifying priority areas/audit processes. The aim of this paper is to point out the importance of the role of internal audit, through the application of techniques, tools and prescribed responsibilities for risk assessment, in the process of detecting fraud in companies that cause incalculable damage on a daily basis.