The contribution of internal audits to the detection and prevention of financial fraud in listed companies: An empirical study

In recent years, the increasing demand for financial transparency and enhanced corporate governance has compelled listed companies to strengthen their internal control frameworks. This trend is particularly pronounced in Morocco, where the gradual alignment with international regulatory standards and heightened oversight from both regulators and stakeholders have intensified the focus on internal audit functions. As financial transactions grow more complex and fraud schemes become increasingly sophisticated, internal auditing has evolved into a critical strategic function. It not only ensures the accuracy and reliability of financial reporting but also serves as a vital mechanism for detecting and preventing fraudulent activities, thereby reinforcing investor confidence and protecting organizational assets. This paper investigates the role and impact of internal audit practices on fraud detection and prevention within Moroccan listed companies. Highlighting the pivotal role internal audits play in corporate governance, the study explores how these practices contribute to securing financial information and mitigating fraud risks. The research begins with a comprehensive review of theoretical frameworks and empirical studies, which inform the development of a conceptual model and corresponding research hypotheses. A quantitative analysis is then conducted on a representative sample of 70 listed companies in Morocco. Utilizing structural equation modeling (SEM) through SMART PLS software, the study tests and validates the proposed hypotheses. The results reveal that effective internal audit practices significantly enhance the early detection and prevention of financial fraud. These findings underscore the importance of internal auditing as a key control mechanism and risk management tool, reinforcing its essential role in fostering transparency and safeguarding the interests of investors and other stakeholders in listed companies.