Sardine | Internal Audit Role: Strengthening Fraud Prevention

What’s up fraud fighters, and welcome to Fraud Forward!

Okay, I need to talk about something that I think gets misunderstood inside a lot of institutions, and honestly, it causes unnecessary friction. The internal audit role is not just the team that shows up after the mess and hands you a report full of findings. That is the old story. The new reality is this, the internal audit role can be one of the strongest engines behind fraud risk governance if we let audit be involved early, with the right boundaries.

In this episode, I am sitting down with Christine Murray, VP of Audit and Compliance at Kohler Credit Union, and I loved this conversation because Christine lives in the real world. She is not talking theory. She is talking about what actually happens when product teams move fast, channels change, and risk teams get pulled in late. And I am telling you right now, risk mitigation before launch is cheaper, cleaner, and kinder to your frontline teams than “fix it after the fraud wave hits.”

Let’s reset the room for a moment. Every time an institution launches something new without a product launch risk review, we are basically handing criminals a fresh surface area to test. And then we act surprised when controls do not fit. I want audit in the room earlier, not to slow things down for sport, but to make sure we are not building shiny new member experiences on top of preventable gaps.

Here is the tension point, and Christine says it perfectly. The internal audit role can become fraud prevention advisory, but audit independence and objectivity cannot get sacrificed. I do not want audit to become a rubber stamp, and I do not want audit to become a shadow product team either. I want internal audit as a strategic partner with clear governance, clear lines, and the credibility that comes from disciplined independence.

We also get into the people side, because I am obsessed with this. Compliance culture development is not a policy PDF. It is the everyday behavior of humans. Branch audit engagement practices matter because branches and contact centers are where risk becomes real. When audit teams can explain the intent behind regulations, reinforce preventive compliance controls, and support organizational ethics culture, the whole institution gets stronger.

And we talk about collaboration that actually works, audit and fraud team collaboration, BSA and audit alignment, cross-functional compliance review, and even external audit collaboration when it makes sense. The goal is financial institution governance that supports enterprise risk oversight without turning everything into a “gotcha.”

If you are in a credit union, community bank, fintech, anywhere with product change and fraud exposure, this episode is my challenge to you. Stop treating audit like a final boss. Bring them in early, build the right boundaries, and let the internal audit role help you prevent problems instead of just documenting them.

What you’ll hear in this episode:

How I see the internal audit role evolving into fraud prevention advisory without losing credibility
What product launch risk review looks like when it is built for speed and rigor
Why audit independence and objectivity is the line we do not cross
How branch audit engagement practices strengthen compliance culture development in real life
How BSA and audit alignment supports fraud risk governance and regulatory readiness preparation
How audit and fraud team collaboration reduces remediation and strengthens enterprise risk oversight

You should listen to this episode if you:

Own audit, compliance, or fraud risk governance responsibilities and want fewer surprises post-launch
Are building new products and need risk mitigation before launch to be part of the process
Want internal audit as strategic partner, not a retrospective enforcer
Need better fraud control testing and preventive compliance controls before criminals find the gaps
Are working on compliance culture development and want branches to understand the why, not just the rule
Care about financial institution governance and enterprise risk oversight that can handle modern complexity

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Episode notes & key takeaways

The internal audit role is becoming proactive

Let me just assure you, the internal audit role is not stuck in the past unless we keep it there.

When I see audit teams embedded the right way, they are doing fraud prevention advisory work that actually prevents pain for everyone downstream. Not by owning controls, but by spotting weak points early and pushing the right questions upstream.

Here is what changes when audit is part of risk mitigation before launch:

Product launch risk review becomes normal, not an emergency scramble
Fraud control testing happens before customers are impacted
Preventive compliance controls get designed into the experience instead of bolted on later
Operational blind spots get surfaced while there is still time to adjust

And I love that Christine calls this out. Early engagement reduces remediation costs and protects the institution’s reputation, but it also protects frontline staff from getting crushed by preventable volume.

Maintaining independence while adding value

Now, I want to double click on the boundary line, because this is where people get nervous, and they should.

Audit independence and objectivity is the foundation. If audit becomes too embedded without guardrails, you lose the credibility that makes audit powerful. So the answer is not “keep audit out.” The answer is “define the engagement.”

What I want institutions to clarify:

When fraud prevention advisory input ends and formal oversight begins
How audit documents advisory involvement to preserve independence
How cross-functional compliance review is structured so audit is informed, not co-owning decisions
When external audit collaboration makes sense to reinforce credibility and regulatory readiness preparation

BSA and audit alignment is also huge here. When audit understands BSA realities and BSA understands audit expectations, fraud risk governance becomes clearer and more defensible.

Independence does not prevent collaboration. It clarifies it.

Culture strengthens control effectiveness

This is the part I care about deeply. Compliance culture development is the difference between controls that work and controls that sit on paper.

Branch audit engagement practices create real opportunities to build accountability without fear. When audit teams explain the intent behind regulations, and when they invest in audit education initiatives, the institution moves from compliance as punishment to compliance as protection.

Here is what I have seen improve when culture is prioritized:

Stronger organizational ethics culture, because people understand the why
Better audit and fraud team collaboration, because trust replaces defensiveness
More consistent execution of preventive compliance controls, because teams see the value
More resilient enterprise risk oversight, because risk is owned across the business

The internal audit role is most effective when it balances internal audit as strategic partner with disciplined independence. That balance is how you strengthen financial institution governance i