What best describes the role of the board and its audit committee in fraud prevention?

What best describes the role of the board and its audit committee in fraud prevention?

• A. Manage day-to-day operations
• B. Oversight of governance, risk management, and internal controls; monitor independence, review audits, and address whistleblower reports
• C. Approve budgets and hires only
• D. Conduct all audits themselves

Answer: (B)

Fraud prevention hinges on strong governance and oversight by the board and its audit committee. Their job is to oversee governance, risk management, and internal controls, and to ensure the audit function remains independent. They review audit findings, monitor how well controls work, and make sure there are effective channels for whistleblower reports and that those reports are properly investigated. This creates an objective check on management and helps catch issues at a systemic level before they escalate. Day-to-day operations are managed by executives, budgets and hires are administrative duties of management, and audits are performed by independent professionals, not conducted by the board itself.

Fraud prevention hinges on strong governance and oversight by the board and its audit committee. Their job is to oversee governance, risk management, and internal controls, and to ensure the audit function remains independent. They review audit findings, monitor how well controls work, and make sure there are effective channels for whistleblower reports and that those reports are properly investigated. This creates an objective check on management and helps catch issues at a systemic level before they escalate. Day-to-day operations are managed by executives, budgets and hires are administrative duties of management, and audits are performed by independent professionals, not conducted by the board itself.