Internal Auditing Case Study Example | Topics and Well Written Essays - 500 words

Internal Auditing - Case con ExampleOne of the internal control mechanisms that the boldness failed to utilize optimally is preventive control. Preventing control in internal auditing is essential because it is the first barrier that protects the shaping from risks that are detrimental to its performance, growth and financial stand. The atomic number 82 risks are operating errors, technological malfunction, negative regulatory pronouncements such as unfair suspensions of employees, and charade. In Kreniks case, the risk that internal audit failed to stop was Fraud. Had there been a strong internal control, the organization would allow developed a transparent payment system such as e payables systems that would have prevented fraud (Rezaee, 2002).Detective control plays a key role in spotting irregularities that have already happened deep down the organization. The aim of detective control is to develop necessary methodologies and tools that can easily spot errors and irregular ity at bottom the functional areas of the organization. In this internal auditing measure, internal auditors are useful when testing risky processes and procedures. In Kreniks case, the organization failed to detect fraud because it did not have an ardent detective control mechanism that would have detected financial malpractices and it took the intervention of the bank to detect the fraud. Failure to regularly reconcile financial documents between US Airforce and the supplier and inability to make appropriate and regular follow -up of payment procedures provided a loophole through with(predicate) which fraud occurred (Frigo, 2002).Corrective control in internal auditing assists in correcting irregularities and errors that have been spotted within the organizations financial data and operations. In Kreniks case, the corrective measures to prevent future frauds are growing strong preventive control measures such as prompt and through reconciliation of transactions with the suppli ers, growth an electronic payment system that is efficient and fast, and conducting regular checks on financial statements information.