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March 29, 2022

Internal auditors highlight increase in fraud

According to a report from the Kroll in collaboration with the Institute of Internal Auditors (IIA) and the Internal Audit Foundation (IAF), 54% of Internal auditors have noticed and increase in cyber and phishing fraud.

The report, Fraud and the Pandemic – Internal Audit Stepping Up to the Challenge, is based on a recent global survey and focus groups with internal auditors, discussing how the role of internal audit in fraud risk management has changed since the start of the pandemic.

The new report revealed that the past two years presented a perfect storm in terms of the likelihood of fraud occurring and going undetected. Changing work practices and a sudden move to remote working presented new opportunities for fraudsters and cybercriminals.

Organizations faced increased exposure to cyber, social engineering, and phishing attacks, as well as instances of impersonating senior management in order to embezzle funds. As well as an increase in cyber and phishing fraud, 40% of respondents experienced an increase in fraud relating to asset misappropriation.

IIA CEO and president Anthony Pugliese said: “No aspects of business operations have been immune from pandemic disruption, and we wanted to see precisely how that disruption impacted organizations’ fraud risk management practices. As companies increase investments in new technologies, it’s clear that when the independent internal audit function is actively providing assurances of internal controls and risk management systems, the impact of fraud is reduced.”

Due to the heightened fraud risks, 36% of survey respondents said they had devoted additional resources to internal controls, and 29% said they’d done that toward data analytics.

Kroll Associate Managing Director, Forensic Investigations and Intelligence Matthew Weitz said: “We have seen the external, organized threat of fraud, for example through cyberattacks and social engineering, strengthen during the pandemic, with the internal threat becoming increasingly hard to identify and remediate. This has driven a rethink of the role of internal audit with many internal auditors stepping up to become more strategic advisors in the fight against fraud.”

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