Internal Auditors Turning to Tech to Fight Fraud: Caseware Report
By Greg Enright
These are dramatic times for internal auditors.
Huge changes spurred by COVID-19 have forced the creation of new business models, many of which will be permanent. The large-scale shift to remote and online work has brought with it heightened security risk. Cyberattacks and online fraud incidents have never been more prevalent. Meanwhile, traditional concerns — like proving and articulating internal audit’s value to others within the organization — have certainly not gone away, and in some cases, have become even more pronounced.
Given these unprecedented circumstances, it’s important to take a wider view of everything that’s happening. Doing so usually adds clarity and offers a good chance to evaluate and adjust strategies where appropriate.
To that end, Caseware is releasing the 2022 State of Internal Audit Trends Report — an in-depth research paper based on a survey of nearly 4,000 professionals with internal audit responsibilities conducted in the fall of last year.
Some of the report’s key focus areas include:
- Internal Audit’s Top Challenges: “Moving from manual process” and “adopting new audit technology” were identified as most often cited challenges for auditors.
- The Pandemic Effect: COVID has spurred an increase in fraud risk and has driven most organizations to increase their investment in technology.
- Fraud Preparedness: Many companies still seem unprepared to manage fraud risks, creating an urgency to develop suitable fraud prevention and response plans.
- The Internal Auditor’s Role: Although auditors appear to have a big part to play in fraud risk management, their involvement could still be much higher.
- Proving Their Value: While “trust and credibility” is not identified as a major issue for most internal auditors, “proving and articulating value” is.
Spotlight on Fraud
A key focus of the report was fraud and how internal audit departments are dealing with it. Given the new opportunities for bad actors to engage in fraudulent behavior created by the pandemic, this always-on topic has gained added importance throughout the past two years since COVID made its unwelcome appearance.
COVID has created logistical and operational challenges, moved more commerce online, and posed greater challenges for many businesses. Resources have been shifted during the pandemic, opening backdoors to fraudsters. Examples of these shifts include focusing more on operational measures than compliance or halting ongoing investigations due to lack of resources.
Survey questions focused on:
- How perceived fraud risk has changed over this time
- The internal auditor’s evolving role in fraud investigation
- The use of advanced technologies, such as data analytics and cloud computing, to help fight the fraud threat
More than 70 percent of respondents said the global pandemic had caused an increase in fraud threats in their organizations, while only 22 percent said the level of fraud has remained about the same.
A key conclusion coming out of the report reveals that, because of these heightened circumstances, it is imperative for organizations that don’t feel they’re prepared to deal with fraud to prioritize this as soon as possible.
The report also gauged adoption levels of advanced technologies to help internal auditors improve their results.
When it comes to cloud-based software, 82 percent of respondents overall said they are using or plan to use some form of it to help fight fraud. The figure is encouraging but perhaps not surprising, as more and more organizations realize just how many advantages this model offers them in the area of fraud management, including:
- integration under a single environment
- ease and simplification of management
- always having the latest and greatest solution version available
On the advanced analytics software front, 62 percent said such tools are a key part of their strategy. However, the fact that 38 percent are not currently using analytics software seems concerning, even if 32 percent said they are planning to use it in the future. It’s an alarming result because we’re living in an age when the amount of business and commerce being transacted online has never been greater. This seems to strongly suggest that there is significant risk for organizations not using this kind of software to defend against online threats.
The findings presented here are just the tip of the proverbial iceberg. Downloading the full report will give you a comprehensive look into how your peers are dealing with many of the changes and challenges that you, too, are no doubt facing, and will provide you with insights into how to keep your internal audit department headed in the right direction in 2022.
Get your FREE copy of the Caseware 2022 State of Internal Audit Trends Report today.
Caseware also recently released its 2022 State of Accounting Firms Trends Report, which you can access here.