The auditors should be independent members with suitable accounting and financial expertise, to appraise the policies underlying the financial reports and to assess their validity. Auditors should ask pertinent questions to clearly understand every transaction, allegation or investigation that has happened. An audit aims to draw out the essence and truth from every answer and helps to examine the controls and processes, employed by the company, in any complex transaction that may be out of the normal process of controls.
The requirement of an annual audit prompts companies to establish an effective compliance programme, which will have anti-fraud controls, to detect fraud, and proper investigation conducted, if fraud is detected. An audit is like a tool that ensures that financial reports would be accurately created and updated, internal control system would be in place and proper reporting and investigation of improper actions would be made.
Most corporate fraud cases have originated at the highest managerial level. ...Show more