What is the primary responsibility of internal auditors regarding fraud?

The primary responsibility of internal auditors regarding fraud is to examine and evaluate internal controls. This involves assessing the effectiveness of the controls that are designed to prevent and detect fraud within an organization. Internal auditors play a critical role in identifying areas where controls may be weak or ineffective, thereby increasing the risk of fraudulent activities. By conducting thorough evaluations, they help organizations improve their internal control systems, which are essential in mitigating the risk of fraud and ensuring the integrity of financial reporting.

Internal auditors focus on the processes and systems in place, recommending improvements to ensure that management can safeguard assets and maintain accurate financial records. Their assessments also allow for timely detection of any irregularities, making it easier for organizations to address issues before they escalate into significant problems.

Other options, while related to the overall function of an organization’s governance and financial reporting, do not encapsulate the core focus of internal auditors in relation to fraud mitigation. For example, physically safeguarding assets pertains more to operational roles, preparing financial statements falls under financial accounting responsibilities, and assessing external audits is a component of the broader audit process but does not directly target the prevention of internal fraud.