Questions for the corporation internal auditor?
Question:
2) If the company is selling private placement stock as fund raising, how to prevent fraud committed by broker or saleman working for the company?
Answer:
(1) Whether an internal auditor will find out a fraud depends on various factors, but if the internal auditor is using effective audit technique, sooner or later, the illegal activities of that CEO will be found out. In most organisation, the Internal Auditor is not reported to the CEO, but to the Board of directors, or the Internal audit committee or the non-executive Directors. Therefore, the threat of being fire is minimised. However, bribe is another problem. I don't' think the CEO can bribe the whole Internal Audit Department.
(2) It depends on which kind of fraud you want to prevent. If you mean the fraud of contravention of security or companies laws regulations, the government has already got very good measures to prevent this from happening. However, it is always advisable to have the Internal auditor and external auditor to be involved in the whole process to prevent other fraud to be committed.
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