Internal Auditing Services and Their Importance in Mitigating Fraud for Your Davao-Based Business

Over the past several years, occupational or employee fraud cases have been in the headlines. Many companies, big and small lose millions of dollars due to occupational fraud. Check tampering, improper payroll transactions, financial statements altering, cash theft, skimming payments from the register, stealing products from the warehouse, and the like fall under this category. Internal in nature, most occupational fraud is motivated by financial pressures like huge debts, medical problems, and other financial difficulties or if they feel that they are not well-compensated.

Now, for every businessman, protecting your assets from fraud should be one of your main concerns. Unless of course, you want to lose a HUGE amount of money. Although it is not feasible to eliminate every possible occurrence, fraud can be prevented. One of the most effective ways to do it is to hire a Davao internal auditing expert.


The Roles and Responsibilities of an Internal Auditor

Internal auditors, in general, play a big role in fraud detection and prevention through monitoring employees and their behavior, as well as the financial statements of the company.

In implementing decisions and making judgement  internal auditors must be fair and unbiased. They must not be influenced by anybody in the organization. And things like these are unlikely to happen when you have a reliable and trustworthy internal audit department.

It is also recommended to consider hiring the services of an outside consultant to work hand in hand with your own audit department. There are a lot of auditing firms in Davao City that offers a wide range of services including internal auditing, external auditing, etc. Hiring from an outside consultant’s service is the ideal solution to have execute fair judgement since he or she doesn’t have any preconceived notions about the company employees. This way, there will be no biases whatsoever.

Below are some of the roles and responsibilities of internal auditors:

  • Protecting the company’s assets
  • Keeping check of systems and procedures
  • Analysing operations and reporting findings
  • Predicting risks and providing possible solutions.
  • Evaluating and advising managers




Internal auditor’s roles are very crucial. That is why they need to be well-trained and knowledgeable to be able to carry out their responsibilities and perform their functions effectively.


The Top 4 Benefits of Outsourcing Internal Auditors

It is very important for a company, not only in Davao City to have its own internal auditing department. However, the trend nowadays is to outsource the task to an auditing firm. The driving force of the many companies to outsource internal auditing function is because of the many benefits outsourcing provide. Below is a list of the many benefits when you outsource your internal auditing tasks:

  1. You can focus more on making money and growing your business, which is the most important.
  2. You can reduce time spent associated with hiring and training new employees.
  3. Employing professional and experienced internal auditors can be very costly. Whereas, outsourcing will save you money as it saves you a considerable amount of your operating cost.
  4. The internal auditor may leave your company, leaving you future problems. This will not happen when you outsource, unless of course, the contract expires.
  5. Outsourcing auditing firms consist of skilled and well-trained professionals equipped with the latest technology and uses leading-edge approaches.


Ten Steps to Mitigate Employee or Occupational Fraud




According to the Association of Certified Fraud Examiners (ACFE), small businesses are more likely to become victims of this kind of crime than the larger ones because. They are more vulnerable to deception and abuse and are likely to suffer much higher losses because they have fewer employees, which means they tend to have to have less segregation among duties as well as fewer internal auditing controls. In addition, fewer employees tend to have a closer employer-employee relationship that they might be less suspicious, making employees more susceptible to fraudulent activity.

  1. To be able to avoid employee fraud before it happens, you must do the following steps:
  2. Conduct background checks. There are a lot of internal auditing experts in Davao City so you must check references before hiring an employee.
  3. Orient the employees and let them know about the fraud policy and the corresponding punishments.
  4. Establish a strong internal control so that the company will not be susceptible to such crime.
  5. Have checks and balances in place in order to NOT manipulate the checks.
  6. Make sure expenditures are valid are approved by the manager and the accountant.
  7. Control your bank statements. Only those who are authorized should have the access to all company financial information.
  8. Make mandatory vacations. This will help you check who’s doing the crime and not.
  9. Having security cameras or CCTV’s monitor employee’s activities and behaviors.
  10. Do a surprise audit to uncover fraud and catch the theft.
  11. Have an independent or external consultant to help.

In a nutshell, internal auditing greatly helps every business or organization from occupational fraud and thus help it to grow and improve. Should you need internal auditing services, you can check out Davao City’s list of auditing firms and choose the one that suits your needs.



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