External auditors’ use and perceptions of fraud factors in assessing fraudulent financial reporting risk (FFRR): Implications for audit policy and practice

Author:

Kassem RashaORCID

Abstract

AbstractThis study used semi-structured interviews with twenty-four external auditors to explore how they perceive and use fraud factors when assessing fraudulent financial reporting risk in external audits. The fraud factors include top management’s motive, integrity, opportunity, rationalisation, and capabilities. The participants work for Big four audit firms and have international auditing experience, specifically in the US, the UK, Egypt, the UAE, Qatar, Bahrain, and Saudi Arabia. The findings reveal that top management’s integrity and motives are, in theory, the most critical factors in fraud risk assessment. However, a self-selection bias pushes external auditors not to evaluate these essential factors because they are too complicated to assess, and not enough guidance is provided to them by standard setters or audit firms. In turn, external auditors concentrate mainly on evaluating the opportunities to commit fraud when assessing fraud risk. This may lead to non-optimal fraud risk assessment and, ultimately, non-optimal audit quality. The findings have implications for policy, practice, and future research, later discussed.

Publisher

Springer Science and Business Media LLC

Subject

Law,Strategy and Management,Safety Research

Reference61 articles.

1. ACFE., 2022 Report to the Nation on Occupational Fraud and Abuse. Available at: www.acfe.com

2. Albrecht, W.S., K.R. Howe, and M.B. Romney. 1984. Deterring fraud: The internal auditor’s perspective. Altamonte Springs: Institute of Internal External Auditors Research Foundation.

3. Albrecht, W.S., C. Albrecht, and C.C. Albrecht. 2008. Current trends in fraud and its detection. Information Security Journal: A Global Perspective 17 (1): 2–12.

4. Albrecht, S., 2014, Iconic fraud triangle endures. Fraud Magazine. Available at https://www.fraud-magazine.com/article.aspx?id=4294983342

5. Al-Dhubaibi, A.A.S., and H.H.H. Sharaf-Addin. 2022. An analysis of external and internal auditors’ use of ISA 240 red flags: The impact of auditors’ estimation of fraud pervasiveness. Cogent Business & Management 9 (1): 2118209.

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3