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Do you have appropriate internal controls? Do you conduct regular internal audits?
Strengthening Fraud Prevention: Why Internal Controls and Audits Matter
Do you have proper internal controls in place?
Are you conducting regular internal audits?
If the answer is no or uncertain, your organization could be exposed to serious financial risk.
A Real-Life Lesson
In one case we encountered, delayed audits created a blind spot within the finance function. This allowed an accounts manager to engage in fraudulent activities without detection for an extended period.
Here’s what the audit uncovered:
Fabricated invoices were generated and paid to non-existent vendors.
Duplicate invoices were created with altered bank details, diverting payments to personal accounts.
Root Cause Analysis
Our investigation revealed two primary weaknesses that enabled the fraud:
Lack of Role Rotation
The accounts manager had been in the same position for over five years, gaining unchecked control over financial operations.Weak Internal Controls
There were no verification checks or segregation of duties, giving one person too much influence over payments and records.
The Way Forward: Strengthening Your Defense
To reduce fraud risk and improve operational integrity, we recommended the following actions:
Mandate periodic job rotation, especially for roles involving cash handling or financial approvals.
Establish and document standard operating procedures for financial control and oversight.
Enforce mandatory leave for key employees, using their absence as an opportunity to perform targeted audits.
Why This Matters
Strong internal controls and routine audits don’t just catch fraud—they deter it. By fostering a culture of accountability, organizations:
Minimize the risk of long-term undetected fraud
Promote transparency and ethical conduct
Strengthen stakeholder confidence
Final Thought
Fraud often exploits familiarity and oversight gaps. Regular internal audits and structured controls are your best defense against misuse of trust and organizational resources.
Make prevention a priority—because catching fraud too late can cost far more than preventing it.
