Effectiveness of internal audit in fraud detection in Tanzania commercial banks

Internal audit processes are integral part of fraud fighting functions in organizations. The main thrust of this research was to explore the effectiveness of internal audit function in fraud detection in Tanzania commercial banks. It also examined ways through which internal audit function and other functions can further help fraud detection in Tanzania commercial banks. Given the nature of the research, it was deemed appropriate to use the survey approach with deployment of questionnaires to selected commercial banking industry in Tanzania. The study found out that analytical reviews, independent confirmations and inquiry techniques are effective ways of detecting fraud. It also found that other ways through which fraud can be detected includes use of forensic accountants, continuous auditing, staff rotation, whistle blowing and fraud reporting. The study also found that relevant training has a direct impact on internal auditors’ ability to detect fraud. For effectiveness of internal auditors in fraud detection to be more pronounced, it is recommended that commercial banks’ management should extend more support to their respective internal audit functions in terms of training, resources and general attitude. Change towards internal audit. Management of commercial banks should consider staff rotations, introduction of continuous auditing and defining clear and reward-full whistle blowing channels to supplement the existing fraud fighting efforts. These initiatives, if implemented, will go a long way in enhancing internal audit capacity to effectively detect and prevent significant frauds in commercial banks in Tanzania.