Internal Audit as a Tool of Detecting Creative Accounting and Fraud in the Process of Effective Management in Organization

Abstract

The purpose of this article is to present the internal audit as a tool for minimalizing the risk of the creative accounting and the risk of fraud in business practice. There is shown audit process and own research in the field of audit sampling. The goal of the audit is to issue a fair opinion about the audited area, and the method of sampling is crucial in the process of detecting potential anomalies. The financial statements may contain some errors economic information may differ from the actual situation. The cause of irregularities in the financial statements may be committed errors, may be the use of creative accounting or in the worst case accounting fraud. Research conducted by the ACFE (Association of Certified Fraud Examiners) shows that the losses due to fraud and corruption are as much as 5% of revenues. The companies which are obliged to be audited in Poland - in accordance with the Accounting Act in Poland - the value of 5% of revenues will amount to not less than approximately 250'000 euros (5% of 5'000'000 euros) - the minimum annual loss due to fraud in these companies. Therefore it is important to properly build a system of "security", which may limit the potential loss of units. The presented research shows that internal audit one of the the best way to detect and protect to fraud.