Internal Auditor, internal audit role in the prevention and detection of fraud,

where internal auditors are often in position better than the external auditor to
detect

fraud

And also at the time set a standard field, because it is most at risk such as
internal control, audit planning and audit evidcnce

1. Internal Control

COSO (2013) argued that internal control is a process that is influenced by the
board of directors, management and other personnel in an entity, which is
designed to provide reasonable assurance regarding the achievement of
objectives related to operations, reporting, and compliance.

The components of an integrated internal control includes: (1) Environmental

Control (control environment); (2) Risk Assessment (risk assessment); (3)
Activities Control (control activity); (4) Information & Communication
(Information & Communication), and; (5) Activity Monitoring (monitoring
activity).

Internal controls can not prevent consideration / bad decision, or external events
that cause an organization fails to achieve its operational objectives, because of
factors: (1) Non objectives set as the prerequisite condition of internal control;
(2) Consideration of false and biased; (3) Losses due to an error (human factor);
(4) The management override of internal controls; (5) Collusion, and; (6) external
events beyond the control of the organization

2. Audit Planning

The audit planning must be prepared taking into account the risks faced by
the organization to be audited. In this case, the internal auditor should utilize the
output of the results of the risk assessment in the design of the audit program.
Therefore, auditors need to understand the following process tool used in the risk
assessment. What is meant by a risk assessment is the identification and
analysis of relevant risks in achieving the objectives of the organization as a
basis for determining how to manage these risks. The risk assessment is
important to do because the condition of the economy, industry, regulatory, and
operational organizations continue to change (for example: the new regulations
on taxation, employment, export-import; the entry of new competitors into the
industry where the company is located; competitors introduce products new; the
use of new technology; etc.). Within the framework of internal control,
management must assess the risks facing the organization, so that it can
implement a form / procedures appropriate controls.

3. In the context of the audit, audit evidence is something (the fact) that can
provide support to the belief auditor so that he can give a conclusion / opinion /
views / consideration of the audit. Auditor's interest to collect, analyze, interpret /
interpreting, and documenting audit evidence.

Real Case

In the case of Enron known occurrence of moral hazard behavior such

manipulation of financial statements by recording a profit of 600 million US
dollars when the company suffered losses. Manipulation of profits caused the
company's desire that the stock remains attractive to investors,

Occurs because:

1. Board of Directors (the board of directors, executive directors and non-

executive director) allow the activity-specific business activity contains elements
of conflict of interest and permits all transactions based on the information that
can only be accessed by the Parties to the company (insider trading), including
practice accounting and unhealthy business before it becomes public.

2.Enron is one of the first major companies are doing out sourcing in total over
the company's internal audit function.

a. Former Enron Chief Audit Executif (head of internal audit) originally

Andersen is a partner KAP is designated as a public accounting firm.

b. Enron financial director comes from KAP Andersen.

c. Most of the Enron accounting staff comes from KAP Andersen.