Internal Auditors:

• Prevention and Detection:
  Internal auditors have a proactive role in the prevention and detection of fraud. They are involved in the design and monitoring of internal controls, which are essential for limiting the risk of fraud within the organization. Internal auditors may also be directly engaged in investigating suspected fraud or routinely conducting audits aimed at detecting fraudulent activities.
• Reporting:
  Internal auditors report their findings to management or those charged with governance. If they discover fraud, they are required to inform the appropriate level of management or the audit committee. If top-level fraud is suspected, they may disclose the matter to external authorities in the public interest.

External Auditors:

• Prevention and Detection:
  External auditors are responsible for planning and conducting the audit to detect material misstatements due to fraud or error. However, their role is not primarily focused on fraud detection but on assessing the risks of material misstatement in financial statements. They are required to maintain professional skepticism and design audit procedures that address fraud risks.
• Reporting:
  External auditors are required to report any detected fraud to the appropriate level of management or those charged with governance. If management is implicated, the external auditors should report directly to the audit committee or board of directors. They are also required to refer to fraud in the audit report if it impacts the auditor’s opinion on the financial statements.