Fraud Psychology in Internal Audit

The Institute of Internal Auditors Presents: All Things Internal Audit

In this episode, Eric Wilson talks with Dr. Kelly Richmond Pope about the psychology behind fraud, why ordinary people commit unethical acts, and how trust, pressure, and culture shape fraud risk. They explore accidental versus intentional perpetrators, cognitive blind spots, whistleblowing challenges, and what auditors can do to better detect and prevent fraud. HOST: Eric Wilson, CIA Director of Internal Audit & Chief Audit Executive, Gulfport Energy GUEST: Kelly Richmond Pope, CPA, PhD Forensic Accounting Professor, DePaul University https://www.kellyrichmondpope.com/

KEY POINTS:

• Introduction to Fraud Psychology [00:00:02–00:00:32]

• What Sparked an Interest in Fraud and Human Behavior [00:00:32–00:03:33]

• Why Fraud Is Often Committed by "Ordinary" People [00:03:33–00:04:21]

• Pressure, Life Events, and the Path to Fraud [00:04:21–00:06:48]

• Thrill-Seeking, Power, and the Adrenaline Factor [00:06:58–00:08:20]

• Intentional, Accidental, and Righteous Fraud Explained [00:08:20–00:10:18]

• Why Accidental Perpetrators Are the Hardest to Detect [00:08:40–00:10:18]

• Cognitive Blind Spots and the Role of Trust [00:10:19–00:13:46]

• Lessons from One of the Largest Municipal Fraud Cases [00:12:29–00:13:46]

• The Difficult Reality of the Internal Auditor's Role [00:13:46–00:15:38]

• When and Why to Bring in Third-Party Investigators [00:15:52–00:16:16]

• Cultural Warning Signs That Fraud Risk Is Increasing [00:16:36–00:17:51]

• Charisma, Likability, and Fraud Risk [00:17:51–00:19:07]

• Managing Relationships While Maintaining Objectivity [00:18:20–00:20:12]

• Behavioral Red Flags Auditors Should Not Ignore [00:20:16–00:22:50]

• Narcissism, Leadership, and Corporate Environments [00:22:50–00:23:38]

• Why Whistleblowing Is So Difficult [00:23:59–00:25:59]

• A Critical Mindset Shift for Auditors [00:26:11–00:26:33]

• Closing Thoughts and Practical Takeaways [00:26:33–00:27:16]

IIA RELATED CONTENT: Interested in this topic? Visit the links below for more resources:

• Global Practice Guide: Internal Auditing and Fraud, 3rd Edition
• Vision 2035
• 2026 Fraud Unmasked Virtual Conference
• Global Internal Audit Standards
• Internal Auditor Magazine: "Playing the Long Game" (Eric Wilson's article)
• Webinar: Internal Auditing and Human Personality: Compatibility Mapping

Visit The IIA's website or YouTube channel for related topics and more.

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