Alternative Internal Audit Structures and Perceived Effectiveness of Internal Audit in Fraud Prevention: Evidence from Jordanian Banking Industry

Rafat Salameh, Ghazi Al-Weshah, Marwan Al-Nsour, Ahmad Al-Hiyari

Abstract


The purpose of this study is to investigate the perceived effectiveness of internal audit units in fraud prevention in Jordanian banking industry. It examines the effect of internal audit souring arrangement on perceived effectiveness of fraud prevention from senior managers’ point of view. A survey of forty five executives is selected to gather information’s to test the study hypotheses. The main findings indicate that internal audit units are perceived effective in fraud prevention. Furthermore, in-house internal audit units are perceived more effective than outsourced internal audit functions in fraud prevention. The study surprising result is that internal audit units may fear from retaliation when reporting fraud related top management, however, this may result in weak independence and objectivity of internal auditors. One of the crucial reasons for these results is that in-house internal audit units have more in depth- knowledge about banks culture, polices and procedures than outsourced auditors . Moreover, senior managers consider that internal audit units have more experience than outsourced auditors in fraud prevention and detection. The study recommends that internal auditors should have comprehensive training programmes to get the sufficient knowledge in fraud prevention and detection in banking industry.
Key words: Accounting; Audit; Structure; Fraud; Banking; Jordan

Résumé: Le but de cette étude est d'examiner l'efficacité perçue des unités d'audit interne dans la prévention contre la fraude dans l'industrie bancaire jordanienne. Il examine l'effet de l'audit interne sur l'efficacité perçue de la prévention contre la fraude du point de vue des cardres supérieurs. Une enquête auprès de 45 cadres est sélectionnée pour rassembler des informations afin de tester les hypothèses de l'étude. Les résultats principaux indiquent que les unités d'audit interne sont perçues efficaces dans la prévention contre la fraude. Par ailleurs, les unités d'audit interne à l'interieur de l'organisation sont perçues plus efficaces que des fonctions d'audit interne externalisées dans la prévention contre la fraude. Un résultat surprenant de l'étude est que des unités d'audit interne auraient peur des représailles lors que la fraude est liée à la haute gestion, cependant, cela peut conduire à l'indépendance et l'objectivité faibles des auditeurs internes. L'une des raisons essentielles de ces résultats est que les unités d'audit interne à l'intérieur de l'organisation ont plus de connaissances en profondeur sur la culture, les politiques et les procédures de l'industrie bancaire que les auditeurs externalisés. Par ailleurs, les cadres supérieurs considèrent que les unités d'audit interne ont plus d'expériences que les auditeurs externalisés dans la détection et la prévention contre la fraude. L'étude recommande que les auditeurs internes doivent avoir des programmes de formation complets pour obtenir des connaissances suffisantes dans la détection et la prévention contre la fraude dans le secteur bancaire.
Mots-clés: Comptabilité; Audit; Structure; Fraude; Opérations bancaires; Jordanie

Keywords


Accounting; Audit; Structure; Fraud; Banking; Jordan ; Comptabilité; Audit; Structure; Fraude; Opérations bancaires; Jordanie

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References


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DOI: http://dx.doi.org/10.3968%2Fj.css.1923669720110703.007

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