Authors: Michail Pazarskis, Grigorios Lazos, Stergios Galanis

Title: THE ROLE OF INTERNAL AUDIT AND ITS CONTRIBUTION TO FRAUD DETECTION AND EFFECTIVE CORPORATE GOVERNANCE

Abstract

The subject of internal audit has attracted the intense interest of researchers in recent years, especially after the occurrence of numerous cases of fraud in the internal business environment, and the finding that, the exacerbation of these phenomena is significantly related to the unsatisfactory adequacy of internal control systems. The purpose of this paper is to study and analyze the phenomenon of fraud within companies as well as to highlight the importance of internal audit as a tool to detect and deal with it. The fraud that ultimately leads to the falsification of financial statements has as its main characteristics the incentives, opportunities and rationalization.A further aim of the work is to capture the effect of internal control on the quality of corporate governance. Also, as shown in the literature review, the application of the principles and rules of corporate governance significantly contributes to minimizing the risk of fraud. As part of the research, a relevant questionnaire was structured, consisting of four sections, which was addressed to seventy professionals in the field, who were the sample of the research.For the statistical analysis of the research data, fraud was used as a dependent variable and internal audit and corporate governance were used as independent variables. From the statistical processing, and in particular from the values ​​of the cronbach a index, it emerged that there is satisfactory reliability, both for the individual questions by variable and for the questionnaire as a whole. The results of the research highlight the significant effect of effective internal audit and quality corporate governance in reducing the likelihood of fraud, which has a negative impact not only on financial performance, but also on the reputation of companies with incalculable further consequences. Furthermore, the analysis showed that there is a high correlation between internal audit and corporate governance. The above results of the research confirm the conclusions that emerge from the review of the literature. Effective internal audit must therefore be a key priority of a business in order to be able to deal promptly and successfully with fraud. Organizing successful internal audit programs, however, is not an easy process, and therefore business executives need to exercise due diligence in their planning.