In recent years the importance of good corporate governance has received significant public and regulatory attention. A crucial part of an entity’s corporate governance is its internal audit function. They start to issue internal audit function to detect fraud. At the same time, there has been significant public concern about the level of fraud within organizations. Generally, few Firms in Semarang have internal audit function. The purpose of this study is to assess whether organizations with an internal audit function are more likely to detect fraud than those without. In this observational study, we use a unique self-reported measure of fraud, primarily relating to the misappropriation of assets and administration. The fraud data are from the 2007 until Internal Audit Firms Survey. The internal audit data are from a separate (firm internal and outsourcing audit department) mail survey sent to the respondents of the Internal Audit Firms Survey. We found that organizations with an internal audit function are more likely to detect fraud than those without. It’s supported by t-value is -3,950 with level of significance 0.020. It’s support previous research conducted by Paul, Colin, & Robyn (2008) suggest that internal audit adds value through improving the control and monitoring environment within organizations to detect fraud. The Firms with internal audit could save their assets from fraud action that often conducted by their employee. Further, organizations with an internal audit function had better governance than those without. These findings suggest that internal audit adds value through improving the control and monitoring environment within organizations to detect fraud. These results also suggest that keeping the internal audit function within the organization is more effective than completely outsourcing that function.