Internal Control and Financial Fraud : Report
Added on - 28 May 2020
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Internal Control and Financial Fraud
Executive SummaryThe report revolves around the importance of internal control for detecting and preventing fraudin organizations. This report covers the famous financial fraud that occurred in Queensland health. Inaddition to this the concept of accounting information system and its importance is also discussed in orderto gain a better understanding of the issue.
IntroductionThe concept of fraud is not new and one of the most popularize kind of frauds that are often heardare the financial frauds. They often create a hassle in the stable financial market while hitting thegoodwill and reputation of a business organsation. In today’s competitive world when the access toinformation has become an easy task then it is quite important to have a proper control measure so thatthe data and financial information can be safeguarded. Internal control has become an efficient tool insuch a time, these are the plans or programs implemented to safeguard the company’s assets and at thesame time ensuring the integrity of accounting records (Draz, 2011). It is quite important to increase theinternal data security in order to remain competitive in the global business environment. The case ofQueensland health is an eye opener for the other organizations regarding their internal security concerns.The report performs a critical analysis of Queensland health and also discusses about the weakness of theorganization that lead to fraud.Literature reviewAccording to Mbeba (2007), the concept of internal control has its roots in the older time period.In the middle ages, people were quite inclined towards controlling their financial documents and accountsin order to verify the use and misuse of the funds. The administrators at catholic churches were quiteinterested to gain detailed and correct records of their transactions, accounts and possible frauds. That iswhy a complex hierarchy of the ministry was created in order to tackle the issues (Graham, 2015).Internal audit and control is the review of economic activity examining financial, accounting and otheroperations. This helps the business entity to maintain a check on the financial and other activities. Theinternal auditor is one of the most overlooked actors in the financial reporting process. Internal auditorsare the one that have direct access to internal controlling mechanism. They directly take part in thepreparation of balance sheet and financial statements (Mbeba, 2007).In the views of Joseph and Albert (2015), internal control plays a quite important role in theprevention of financial frauds. It is up to the management to implement an effective internal controlsystem in order to tackle and prevent frauds. Internal control mechanism is a significant tool behind thesmooth functioning of a business entity. Frauds are become quite common and in today’s digitized andglobalised world information has become quite vulnerable aspect. The modern tools and techniques cancause data harm and financial frauds in seconds so in order to be safe, it is important to pay attentiontowards internal control mechanism (Joseph and Albert, 2015).