The Critical Role of Internal Audit in Addressing Bank Fraud: A Conceptual Framework and Critical Review of the Literature with Future Extensions

21 Pages Posted: 21 Jul 2015

See all articles by Georgios Vousinas

Georgios Vousinas

National Technical University of Athens

Date Written: July 18, 2015

Abstract

The recent global financial recession highlighted the critical role that the banking system plays in the modern economy. Banks are complex financial institutions that operate in a constantly changing business environment and deal with high levels of risk, while facing fraudulent actions in regular basis. In order to address these problems, banks engage in various internal audit techniques such as the implementation of controls and prevention tools, the usage of anti-fraud methods and data mining. The aim of this paper is to redefine the contribution of internal audit in the banking system by highlighting its crucial role in addressing bank fraud. This is achieved by initially proposing a new conceptual framework and then by providing a thorough critical review of both theoretical and empirical literature which helps in determining the value of internal auditing. The results confirm the fact that internal audit can play a major role in risk assurance and bank fraud management thus, ensuring their normal and uninterrupted operation. The paper also provides some useful insights for future application of internal audit methods in the banking sector thus, laying the ground for a fruitful dialogue among the various stakeholders.

Keywords: Internal audit, banking system, fraud, risk, loss

JEL Classification: M42

Suggested Citation

Vousinas, Georgios, The Critical Role of Internal Audit in Addressing Bank Fraud: A Conceptual Framework and Critical Review of the Literature with Future Extensions (July 18, 2015). Available at SSRN: https://ssrn.com/abstract=2632911 or http://dx.doi.org/10.2139/ssrn.2632911

Georgios Vousinas (Contact Author)

National Technical University of Athens ( email )

Heroon Polytechniou 9
Zografou
Athens, 15780
Greece

HOME PAGE: http://www.mech.ntua.gr

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