The role of internal audit in detecting and preventing fraud: A study on internal auditors working in the automotive industry

Fraud is a set of actions that include misleading, fake or unfair practices that aim to gain profit or harm a party in violation of ethical principles and legal regulations. Frauds manifest themselves in a wide range of areas in the business world, from conflicts of interest to manipulation of financial reporting. Such irregularities, beyond causing financial losses, damage the corporate reputation of the enterprises, undermine the trust between the employee and the employer and negatively affect the relations within the organization. Enterprises tend to get support from internal audit systems in order to minimize the risk of fraud, detect and prevent fraud. The purpose of this study is to reveal the role of internal audit systems in the detection and prevention of fraud. In line with this purpose, a conceptual framework was created on the subjects of fraud, internal control, internal audit, detection and prevention of fraud, and subsequently a field study was conducted in order to combine theoretical knowledge with real-world applications. In the study, semi-structured interviews were conducted with internal auditors working in authorized dealers and services affiliated to the Turkish distributor of a manufacturer brand operating in the automotive sector. The study is important in terms of evaluating the phenomenon of fraud from the perspective of auditors. The sample of the study was determined using the non-probability criterion sampling method and 10 participants were reached. The transcripts obtained from the interviews were transferred to the Maxqda 2024 program, a qualitative analysis program, and coded using thematic analysis, one of the qualitative analysis methods. As a result of the coding process, 11 themes, 62 codes and 15 subcodes were determined and the obtained outputs were presented visually. In this respect, the study reveals with concrete data how internal audit units play a role against fraud. The findings obtained show that internal audit systems provide high success in detecting and preventing fraud and that even the presence of auditors significantly reduces the risk of fraud as a deterrent element. The research results reveal that internal audit systems supported by internal control mechanisms operate more efficiently and provide stronger protection. In this context, it was concluded that a strong internal audit system is not only a necessity but also a strategic priority for businesses to achieve their sustainable success and long-term reliability goals.