MAJOR INTERNAL AUDIT FINDINGS WHICH EXPOSED CORPOERATE SCANDALS – REAL LIFE EXAMPLES

 MAJOR INTERNAL AUDIT FINDINGS

WHICH EXPOSED CORPOERATE SCANDALS –

REAL LIFE EXAMPLES 

Here’s a list of major internal audit findings observed in real-life corporate cases in India and globally, across key functional areas — finance, operations, compliance, IT, and governance. 

 

1. FINANCIAL MISSTATEMENTS & IRREGULAR ACCOUNTING 

 

• IL&FS Group (India) – Internal audit reports highlighted circular fund transfers between group entities to mask true financial position. 

• Satyam Computers (India) – Internal audit missed fictitious cash balances and inflated sales invoices. 

• Wirecard AG (Germany) – Audit trails revealed fake transactions and missing ₹15,000+ crore in escrow accounts. 

 

2. PROCUREMENT & VENDOR MANAGEMENT 

 

• ONGC Internal Audit (CAG findings) – Overpayments and violation of tender terms in procurement contracts. 

• Public Sector Units (India) – Audit reports often cite tender manipulation, single-bid awards, and collusion between suppliers. 

 

3. HUMAN RESOURCES & PAYROLL 

 

• Coal India subsidiaries – CAG audit noted salary payments to retired/deceased employees due to poor HR database control. 

• Infosys (2019 internal review) – Found lapses in variable pay computation and timesheet reporting controls (though not fraudulent). 

 

4. IT & CYBERSECURITY CONTROLS 

 

• Tata Communications (2022) – Internal IT audit highlighted data leakage vulnerability due to misconfigured cloud storage. 

• Equifax (U.S.) – Breach occurred due to missed patch updates; audit revealed lack of vulnerability tracking. 

 

5. TREASURY & CASH MANAGEMENT 

• Punjab National Bank (Nirav Modi scam) – Internal audit failed to detect misuse of SWIFT messages and unauthorized LoUs. 

• Cairn India (Internal audit report) – Identified delays in bank reconciliations and manual interventions in fund transfers. 

 

6. REGULATORY & STATUTORY NON-COMPLIANCE 

 

• Brightcom Group Ltd (SEBI order, 2025) – Audit and SEBI investigation found falsified financial statements and lack of internal control. 

• Cognizant India (2020) – Audit identified potential FCPA (bribery) violations in government approvals. 

 

7. INVENTORY & ASSET MANAGEMENT 

 

• Hindustan Aeronautics Limited (CAG audit) – Found idle machinery worth crores and obsolete inventory unadjusted. 

• Retail sector audits (Future Retail, etc.) – Shrinkage and pilferage due to poor warehouse controls. 

8. PROJECT & CAPEX MANAGEMENT 

• NHAI subsidiaries – Internal audit and CAG noted unapproved scope changes and payments to non-performing contractors. 

• Reliance Infra projects – Audit flagged delayed project milestones without escalation procedures. 

9. RELATED PARTY TRANSACTIONS 

• Fortis Healthcare (Malvinder–Shivinder Singh case) – Internal audit uncovered ₹400 crore siphoned to promoter-linked entities. 

• Café Coffee Day (CCD) – Promoter-level related party borrowings misrepresented in company records. 

10. GOVERNANCE & INTERNAL CONTROL FAILURES 

• Yes Bank – Internal audit failed to flag repeated breaches of single borrower exposure norms. 

• Jet Airways – Weak board oversight and lack of control over promoter-linked entities flagged by internal auditors. 

FINAL THOUGHTS  

Internal audit is important because it provides an independent and objective assurance that an organization's risk management, governance, and internal control processes are operating effectively, which helps achieve strategic goals, improve operational efficiency, ensure regulatory compliance, and protect assets and reputation. By identifying inefficiencies, detecting fraud, and mitigating risks, internal audit adds significant value and contributes to the overall success and ethical governance of a business 

AUDIT COMMITTEE OVERSIGHT 

Audit committee should  always analyze the Internal  Audit reports and try to address the red flags raised by Internal Auditor to stop future sandals in the organization.  

R V SECKAR FCS,LLB 79047 19295