Internal audit is no doubt the best tool for internal control. I am sure you already know that the establishment and operation of internal control in an organization is the best way to prevent fraud, deter fraud and discover fraud.
FTA stands for Fraud Triangle Analytics. FTA is a revolutionary tool designed and introduced by the ACFE in November 2009 to enhance effectiveness of internal control measures on e-mails and instant messages (IM). It is a system that is based on keyword censor. FTA system is fed with keywords that will trigger investigation whenever certain keywords are mentioned a number of time.
A dashboard like interface is made use of to monitor the tempo of communication that is going on between employees while at the same time keeping within the confines of the law. Your chance of violating the privacy act and other acts that protects peoples’ private life is significantly reduced through the use of FTA.
You will notice a spike from your control dashboard each time an employee mention certain words up to a specified number over a period of time. At this point, all you will have to do is carryout a detailed analysis on the communication life of the identified individual. Note that FTA is a fraud detection, fraud prevention and fraud deterring tool that is usually imbedded into the internal audits process of a business to get the best in terms of internal control. This will now lead us to the following questions: what is internal control? What is internal audit? The answers to these questions will be base of the following paragraphs
WHAT IS INTERNAL CONTROL?
Internal controls are the totality of procedures, policies, and guidelines that are put in place to ensure that company’s objectives are met which includes the protection and safeguarding of company’s assets. Internal controls takes into account the control environment of a company before setting up a functional and operational internal control system.
Control objectives and control plans are two major tools that are used to ensure that attention is not diverted from the main idea behind the institution of internal control. It should be noted internal control should be more preventive (proactive) oriented rather than discovering (reactive) oriented
WHAT IS AN INTERNAL AUDIT?
Internal audit is the actions taken by management of a business through a committee to ensure that controls are implemented to the letters. Internal audit just like internal control should not only be focused on the protection of asset but should include evaluation of risk exposure of the business entity. Risk assessment technique should be employed to see if a company is at risk of being defrauded.
Internal audit committee can either be an independent entity or part of the main company. Internal audit committees perform better when it is truly independent of the day to day administrative and running of a business.
Now that you have known what internal audits and internal controls are, you can now imagine what the result will be when we combine these with the fraud fighting power of FTA. I will leave you to figure out the rest for your self.