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1
Elder, Randal J., and Alfred A. Yebba. "The Roslyn School District Fraud: Improving School District Internal Control and Financial Oversight." Issues in Accounting Education 32, no. 4 (2017): 25–39. http://dx.doi.org/10.2308/iace-51753.
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ABSTRACT The voters in Roslyn, New York inadvertently funded a multi-year embezzlement of $11 million of school district tax funds. Disguised by exceptional school rankings, and supported through a strong tax base, it was the largest embezzlement of school district funds to occur in the United States. Perpetrated by a school superintendent and his conspirators, initial evidence of the cash fraud was discovered two years prior to a formal investigation; however, a series of cover-ups by board of education members along with substandard audit work allowed the embezzlement to continue. State regulators responded to the crisis with the passage of a series of fiscal reform legislation aimed at improving school district internal control through changes in school district governance, the procurement of independent auditing, and state agency oversight. The case explores the incentives, rationalization, and opportunities for the perpetration and concealment of the Roslyn fraud as well as the overall impact of the state's fiscal reform legislation on New York's independent audit markets and reporting quality. This case is suitable for use in both auditing and governmental and not-for-profit courses.
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Ruggieri, Lynn. "From Horses To Log Cabins A $9 Million Embezzlement Case: How Did The Owner Not Know?" Journal of Business Case Studies (JBCS) 8, no. 6 (2012): 575–84. http://dx.doi.org/10.19030/jbcs.v8i6.7379.
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The recent economic recession has forced companies to tighten the reins on expenses and fraud is one expense that companies cannot afford. Fraud, however, is becoming a much larger problem for business. This actual fraud case by an employee at a privately held company details how a $9 million embezzlement fraud was committed and detected. This case highlights the identification of the fraud, analysis through the use of the fraud triangle and the weaknesses in the internal control of the organization. This case identifies auditing issues and fraud examination procedures.
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Brown, Veena L., Brian E. Daugherty, and Julie S. Persellin. "Satyam Fraud: A Case Study of India's Enron." Issues in Accounting Education 29, no. 3 (2014): 419–42. http://dx.doi.org/10.2308/iace-50735.
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ABSTRACT This case provides students a unique opportunity to examine and reflect on the challenges of auditing in today's global environment. Students examine a real-world billion dollar plus embezzlement and fraud at Satyam Corporation, an international company based in India and previously trading on the New York Stock Exchange. The case focuses on auditors' responsibilities related to obtaining and evaluating audit evidence, particularly as it relates to confirming cash and receivables. It also explores the quality control responsibilities related to audit procedures performed by foreign affiliates of a large international audit firm. The case illustrates the role of culture in performing an audit in accordance with auditing standards issued by the U.S. Public Company Accounting Oversight Board. Additionally, case details provide opportunities for class discussions and foster students' critical thinking skills on other auditing topics such as audit risk and planning, related party transactions, tone-at-the-top, and internal control deficiencies. By using a foreign issuer to explore these issues, the case highlights both the technical and international challenges of performing auditing procedures.
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Alderman, Jillian. "Million dollar gamblers: a case of embezzlement in South Whitehall Township." CASE Journal 15, no. 3 (2019): 171–80. http://dx.doi.org/10.1108/tcj-12-2018-0122.
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Theoretical basis The fraud diamond theory, the COSO framework on internal control and theories of ethical leadership and ethical decision making are applied. Research methodology The details of this case were compiled using publicly available information, including court records and news reports. No modifications were made to the names of individuals or places mentioned in the case. All resources have been properly cited. Case overview/synopsis Employee embezzlement is a common issue in limited resource organizations when adequate controls are not in place to prevent or detect fraud. In such organizations, personal financial hardships can drive individuals to commit crimes that are out of character. This case is a story of a respectable small-town couple implicated in a near million dollar embezzlement scheme. Students are asked to consider what went wrong and propose solutions for the prevention of similar crimes. Lessons learned from this case emphasize the importance of ethical leadership, creating a strong ethical environment and how small unethical acts can escalate over time. Complexity academic level Instructors can utilize this case to teach the topics of ethical leadership and decision making, fraud prevention and detection and internal controls. The themes of this case fit well into any business ethics, accounting or auditing course at the undergraduate or graduate level. The case has been implemented in courses for full-time and part-time MBAs, and master’s programs in finance, human resources and accounting.
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Daugherty, Brian, and Daniel G. Neely. "Koss Corporation Case: Trouble in Brew City." Issues in Accounting Education 26, no. 3 (2011): 547–68. http://dx.doi.org/10.2308/iace-50004.
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ABSTRACT This instructional case provides auditing students an opportunity to examine an interesting real-life embezzlement and financial statement fraud occurring at a publicly traded company in the post-Sarbanes-Oxley (SOX) era. The case focuses on independent auditors' and senior management's reporting responsibilities related to internal control over financial reporting involving smaller public companies (nonaccelerated filers). While all public companies are subject to external auditor and management attestation on the effectiveness of internal control over financial reporting following SOX, the Securities and Exchange Commission (SEC) granted nonaccelerated filers numerous extensions for the effective date of required auditor attestation. In 2010, President Obama signed legislation to permanently exempt nonaccelerated filers from auditor attestation. The case also highlights inherent risk assessments by the independent auditor when one individual holds multiple C-level titles (Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, etc.) within the organization concurrent with membership on the board of directors, and requires students to recommend internal control policies and procedures designed to prevent or detect the embezzlement.
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Chui, Lawrence, and Diane M. Matson. "Embezzlement at the Grandview Community Recreation Association." Issues in Accounting Education 34, no. 2 (2019): 41–59. http://dx.doi.org/10.2308/iace-52392.
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ABSTRACT This case is based on actual fraud at a not-for-profit organization. In this case, students assume the role of a volunteer forensic investigator who assists the local police department to investigate the possible embezzlement case for a recreation association. Students learn about the activities and the people who are involved with the association. Through the examination of various documents, they identify any discrepancies between the association's accounting records and bank statements. Students apply the fraud triangle to gain a perspective on the possible motivation, opportunity, and rationalization of the likely perpetrator. Students become familiar with the concept of embezzlement and larceny, and recommend fraud prevention practices for the association. After completing this case, students are more aware of why and how small not-for-profit organizations are more susceptible to fraud than are other organizations. This case is appropriate for use in a forensic accounting course or an advanced auditing course.
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Puspasari, Novita, and Meutia Karunia Dewi. "The effect of government internal auditors� moral reasoning and situational pressure on the tendency to commit fraud when auditing: An experimental study." Journal of Economics, Business & Accountancy Ventura 18, no. 3 (2015): 448. http://dx.doi.org/10.14414/jebav.v18i3.514.
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This study aims to examine the effect of government internal auditors moral levels and situational pressures on the tendency to commit fraud when conducting audit. Based on the hypothesis, despite the situational pressures, the government internal auditors who have a high moral level will not commit fraud at the time of auditing. Meanwhile, the government internal auditors who have a low moral level will com-mit fraud at the time of auditing when there is situational pressure. To test the hypothesis, a 22 factorial experiment is conducted involving 68 students of STAR-BPKP of Jenderal Soedirman University. The results indicate that the government internal auditors who have a high moral level will not commit fraud in the time of auditing despite some situational pressures. Meanwhile, the government internal auditors who have a low moral level will commit fraud at the time of auditing either there is a situational pressure or not. The implications of this study are to streng-then the supervisory system for the internal auditors at the time of auditing, to provide protection for whistle- blowers who report the presence of fraud committed by auditors, and to be consistent in giving reward to professional auditors and pu-nishment to auditors who are convicted of fraud at the time of auditing.
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Dewi Yuniarti Rozali, Rozmita, and Jabbaar Mohammad. "PENGARUH PELAKSANAAN RISK BASED INTERNAL AUDITING TERHADAP PENCEGAHAN FRAUD." Jurnal Riset Akuntansi dan Keuangan 3, no. 3 (2015): 831. http://dx.doi.org/10.17509/jrak.v3i3.6623.
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This study aims to determine the effect of implementation of risk based internal auditing on fraud prevention on internal audit Inspection Office Bank BRI Bandung Region. The sample used by 18 internal auditors in Inspection Office of Bank BRI Bandung Region saturated sampling method. Based on calculation of simple regression analysis obtained result that every increase of implementation of risk based internal auditing (X) will lead to increase fraud prevention (Y). It shows that there is a positive influence between the implementation of risk based internal auditing on fraud prevention on the internal audit of Inspection Office of Bank BRI Bandung Region.
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Westhausen, Hans-Ulrich. "The escalating relevance of internal auditing as anti-fraud control." Journal of Financial Crime 24, no. 2 (2017): 322–28. http://dx.doi.org/10.1108/jfc-06-2016-0041.
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Purpose The purpose of this paper is to discuss critical success factors for the enormous development that internal auditing (IA) as “third line of defense” (IIA, 2016) and one of the strongest anti-fraud controls has reached within the past decades. Additionally, weaknesses of IA are identified and evaluated to allow further improvement. Design/methodology/approach The anti-fraud requirements stipulated in the “International Standards for the Professional Practice of Internal Auditing” are confronted with empirical data about the current situation of the IA as anti-fraud control. The empirical data were extracted from global sources such as “Fraud Reports” (Association of Certified Fraud Examiners – ACFE) and “common body of knowledge (CBOK)” studies. The Institute of Internal Auditors (IIA). Findings Over the years, IA has been continuously increasing its auditing quality and effectiveness with new analytical methods, specialized software tools and professional certifications. But all these efforts have hardly been reflected in statistical or research data, especially not in the listing of the top sources of fraud detection. The “ACFE-Fraud Report 2016” revealed that IA is now – for the first time ever – second among the initial detections of occupational frauds (financial statement fraud, corruption and asset misappropriation) worldwide. This positive trend of global anti-fraud auditing was probably no “one-hit wonder”, but a result of a lengthy process of professionalization of IA. Originality/value It is hoped that this paper will facilitate the discussion about the value that IA can add within an anti-fraud management system.
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Pagano, Marco, and Giovanni Immordino. "Corporate Fraud, Governance, and Auditing." Review of Corporate Finance Studies 1, no. 1 (2012): 109–33. http://dx.doi.org/10.1093/rcfs/cfs001.
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We analyze corporate fraud in a setting in which managers have superior information but are biased against liquidation because of their private benefits from empire building. This may induce them to misreport information and even bribe auditors when liquidation would be value-increasing. To curb fraud, shareholders optimally design corporate governance by jointly choosing audit quality and managerial compensation. We analyze how country-level rules affect these firm-level choices. Our analysis underscores that different country-level governance provisions have different effects on firm-level governance: Some act as substitutes of internal governance mechanisms, whereas others enhance their effectiveness and therefore complement them. (JEL G28, K22, M42)
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Salleh, Mohd Fuad Mohd, and Tulus Suryanto. "Fraud Detection on Banking Industry in South Sumatera: A Study on the Role of Internal Auditors’." International Journal of Shari'ah and Corporate Governance Research 2, no. 2 (2019): 62–67. http://dx.doi.org/10.46281/ijscgr.v2i2.399.
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Internal auditors function is important as the first filter against fraud in the implementation of fraud detection in banking and financial industry. This study was conducted involving internal auditors at several banks in South Sumatera, Indonesia. Questionnaire was used to collect the data which was then analyzed using SPSS. The results indicate that the auditing expertise of supreme internal auditors do not suit the criteria of fraud detection. Therefore, it is concluded that the internal auditors in banking industry in South Sumatera are not ready yet for the implementation of fraud auditing.
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Janvrin, Diane J. "St. Patrick Company: Using Role Play to Examine Internal Control and Fraud Detection Concepts." Journal of Information Systems 17, no. 2 (2003): 17–39. http://dx.doi.org/10.2308/jis.2003.17.2.17.
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This instructional case uses role play to provide students in accounting information systems or auditing with experience in evaluating a firm's internal control environment to assess the likelihood of errors and fraud. The objective is to illustrate how role play can reinforce two important systems/auditing topics: internal control evaluation and fraud detection. The case provides a framework for the discussion of internal control and fraud detection concepts developed in audit standards.
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Lylia Hamdan, Sunita, Nahariah Jaffar, and Ruzanna Ab Razak. "The Effects of Interaction between Internal Auditor and Audit Committee on Fraud Detection in Malaysia." International Journal of Engineering & Technology 7, no. 4.38 (2018): 1338. http://dx.doi.org/10.14419/ijet.v7i4.38.27820.
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This study aims to examine the effect of interaction between internal auditor and audit committee on fraud detection in Malaysia. Specific interaction is firstly; audit committee approving the appointment of chief audit executive, the evaluation of chief audit executive, the dismissal of chief audit executive, the internal audit budget and the internal audit plan or program. Secondly, audit committee’s involvement in reviewing internal auditor’s work specifically; providing input for the internal audit plan, reviewing the results of internal auditing related to financial reporting, reviewing the results of internal auditing related to internal control, reviewing the results of internal auditing related to compliance with laws and regulation, reviewing the internal audit involvement in management responses to internal audit suggestions, reviewing the difficulties or scope restrictions encountered by internal auditors and reviewing the coordination between internal auditors and external auditors. Survey questionnaires were mailed to internal auditors attached to 782 companies listed on Bursa Malaysia’s main market. The results of this study suggest that involvement of audit committee in approving chief audit executives’ matters is insignificant on internal auditors’ contribution to fraud detection. However, audit committee’s involvement in reviewing internal auditors’ work significantly influence the internal auditors’ contribution in fraud detection.
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Patterson, Evelyn R., and J. Reed Smith. "The Effects of Sarbanes-Oxley on Auditing and Internal Control Strength." Accounting Review 82, no. 2 (2007): 427–55. http://dx.doi.org/10.2308/accr.2007.82.2.427.
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We provide a theoretical investigation of the effects of the Sarbanes-Oxley Act of 2002 on auditing intensity and internal control strength. We propose a model of strategic auditing in which the auditor can use resources for both internal control tests and substantive tests, while the manager can choose the strength of internal controls and the amount of fraud. We find that control tests are a valuable tool for the auditor when control strength is informative about the likelihood of fraud. We find that Sarbanes-Oxley has the desired effect of inducing stronger internal control systems and less fraud, but does not necessarily induce higher levels of control testing. Our model suggests that audit risk increases as a result of the Sarbanes-Oxley Act.
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McKnight, Constance A., Tracy S. Manly, and Pamela S. Carr. "Maxwell and Company: Staff Auditor Embezzlement at a Small Client." Issues in Accounting Education 23, no. 2 (2008): 291–97. http://dx.doi.org/10.2308/iace.2008.23.2.291.
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Maxwell and Company, a local accounting firm, discovers that one of its employees has embezzled funds from a client. This case requires you to examine the components of the fraud triangle and apply them to the facts of the case. The case emphasizes the importance of quality control at accounting firms and internal controls at small companies. In addition, the case provides you with an opportunity to analyze the responsibilities of accountants, accounting firms, and accounting students.
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Patterson, Evelyn R., and J. Reed Smith. "The Strategic Effects of Auditing Standard No. 5 in a Multi-Location Setting." AUDITING: A Journal of Practice & Theory 35, no. 1 (2015): 119–38. http://dx.doi.org/10.2308/ajpt-51172.
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SUMMARY Auditing Standard No. (AS) 5 provides guidance in the required audit of internal control over financial reporting and its integration into the financial statement audit. AS 5 advocates a “top-down” approach, in which control testing helps the auditor assess the risk of financial misstatement across multiple locations. We consider a manager who oversees two locations and who has private information about internal control strength in each location. Only when controls are weak can the manager commit fraud. We show how the manager's opportunity to commit fraud and informational characteristics of internal control tests impact the manager's probability choice of fraud and the auditor's choice of substantive test effort.
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Knapp, Michael C., and Carol A. Knapp. "Of Hurricanes and Harness Racing: The Accounting Fraud at DHB Industries, Inc." Issues in Accounting Education 28, no. 1 (2012): 131–52. http://dx.doi.org/10.2308/iace-50297.
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ABSTRACT: This instructional case focuses on an accounting and financial reporting fraud involving DHB Industries, Inc., the nation's largest manufacturer of bullet-resistant vests. Three executives of this Securities and Exchange Commission (SEC) registrant, including its founder and CEO, masterminded a large-scale fraud that grossly misrepresented DHB's financial statements. The three executives colluded to conceal their misdeeds from the four accounting firms that served as the company's independent auditors over the course of the fraud. In late 2010, a federal jury convicted DHB's former CEO and COO of multiple counts of fraud and related charges. This case addresses a wide range of auditing issues raised by the DHB fraud, including the identification of fraud risk factors, auditing of related-party transactions, the impact of frequent auditor changes on audit quality, and the internal control reporting responsibilities of auditors.
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Kızıl, Cevdet, Erol Muzır, and Vildan Yılmaz. "Auditing Techniques to Minimize Accounting Related Fraud and Errors: A Qualitative Analysis with the Interview Method." EMAJ: Emerging Markets Journal 11, no. 1 (2021): 95–103. http://dx.doi.org/10.5195/emaj.2021.232.
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Accounting is more integrated with the technology today compared to the previous years. The increase in a variety of technological developments and commercial transactions has further increased the number and type of errors as well as frauds related to the accounting profession. This causes misleading information for several stakeholders. Stakeholdes sometimes make false decisions based on the financial statements created as a result of false and fraudulent transactions. In order to minimize the errors and frauds concerning the accounting system of enterprises, effective internal controls and auditing systems should be in order. It is evident that, setting up the required internal controls and auditing systems reduce asset losses and provide great benefits in the long run for firms. Existence of strong internal controls and auditing systems in enterprises has gained great importance in Turkey. This study provides information about the audit techniques that can minimize accounting related frauds and errors in businesses. The research includes and employs an interview with auditing professionals as the research methodology. Auditors working within three audit firms were selected by simple random sampling via the LinkedIn social media. The three participants were directed 10 semi- structured and open-ended questions. Qualitative analysis was adopted for this study. According to the results of research, companies use a number of tools to prevent accounting related frauds and errors. These most effective tools to minimize the frauds and errors are detected as internal auditing, internal controls and independent (external) auditing. Auditing professionals have high awareness about accounting related fraud and errors. But, auditor independency should be higher, proactive approach must be utilized and auditors must closely follow the new laws and regulations in addition to being familiar with the firms’s operations and sectors to minimize the fraud and errors. The Benford's law, artificial neural networks, analytical methods, data mining, red flags and analytical methods are commonly used by the auditors against frauds and errors. In general, the internal controls and auditing professions are in a much better situation today in Turkey compared to the previous years. But, this is still not adequate and there is a long way to complete ahead based on the opinions of auditing professionals.
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Maclean, Sindisile. "Examining Auditing as an Essential Element of Financial Management and Good Governance in Local Government." Africa’s Public Service Delivery and Performance Review 2, no. 2 (2014): 82. http://dx.doi.org/10.4102/apsdpr.v2i2.53.
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The purpose of the article is to address issues of auditing in the context of financial management as a contribution to good governance. Generally, not all local governments have effective and operational audit units and committees. As a result, auditing is not used as an essential element of good governance and this leads to bad audit outcomes like disclaimers and adverse opinions. The bad audit outcomes in local government have motivated the researcher to conduct the study on auditing. There are internal factors within the municipalities as well as external factors that are of interest and directed the researcher to have desire and commitment to make a contribution in this particular field of research. The key issues, amongst others, are principles of financial management, financial strategy, auditing functions such as forensic auditing, fraud auditing, forensic accounting and detection of fraud, including accounting systems and auditor’s role. This article will also attempt to reinforce existing theories and add value to local government financial discourse and good governance.
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FINLEY, DAVID R. "Game Theoretic Analysis of Discovery Sampling for Internal Fraud Control Auditing." Contemporary Accounting Research 11, no. 1 (1994): 91–114. http://dx.doi.org/10.1111/j.1911-3846.1994.tb00438.x.
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Michelman, Jeffrey E., Victoria Gorman, and Gregory M. Trompeter. "Accounting Fraud at CIT Computer Leasing Group, Inc." Issues in Accounting Education 26, no. 3 (2011): 569–91. http://dx.doi.org/10.2308/iace-50003.
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ABSTRACT The case chronicles a newly promoted manager's search to uncover an inventory fraud that had been perpetrated by her supervisor at CIT, a publicly held company. During the ensuing investigation, CIT and the Florida Department of Law Enforcement identified 36 different transactions involving the diversion of nearly 2,500 computers, with a conservative estimated total loss to the company of $637,000. Students are also exposed to the importance of internal controls, red flags, the fraud triangle, and forensic accounting techniques. The case also lets the reader see what occurs when, due to management override of internal control, a subordinate no longer trusts a supervisor's communicated information. This can be used at the undergraduate or graduate level in an Accounting Information Systems, Internal Auditing, or Auditing or Fraud/Forensic Accounting class. The Teaching Notes also have an accompanying video, in which the investigators and prosecutor discuss issues related to the case, including the specifics of the case, whistleblowers, and the fraud triangle, and the roles of law enforcement and the judiciary. Included in the video are interviews with the Florida Department of Law Enforcement investigators and the prosecuting attorney that were involved in the CIT case.
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Ragothaman, Srinivasan C. "The Madoff Debacle: What are the Lessons?" Issues in Accounting Education 29, no. 1 (2013): 271–85. http://dx.doi.org/10.2308/iace-50597.
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ABSTRACT This paper describes the implementation of a “Ponzi scheme case study” in auditing classes at the undergraduate and the Master's level. This instructional case is based on the much-publicized Madoff Ponzi scheme. The case exposes students to several auditing-related concepts, including: (1) fraud auditing; (2) ethical reasoning and utilitarian principles; (3) affinity fraud and Ponzi schemes; (4) internal control evaluation; (5) governance issues; (6) the Securities and Exchange Commission (SEC) investigations; (7) investment strategies and terminologies; and (8) regulation. The case provides students with an opportunity to assume the role of an external auditor and participate in some active learning exercises. About 170 accounting majors participated in this case project during a three-year period at a Midwestern university. Students who worked in groups were genuinely engaged in the learning process, and they came up with several red flags associated with the Madoff fraud and suggested many new internal controls. This case provides a hands-on learning experience to students that could be relevant for them in their future career in public accounting. Student opinion surveys conducted about the learning outcomes of this project indicate strong student engagement, active learning, and satisfaction.
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Caroline Pontes de Lima, Francine. "AUDITORIA INTERNA DE ESTOQUE COMO FERRAMENTA NA PREVENÇÃO DE FRAUDES E DESVIOS DE MATÉRIA-PRIMA." Revista Científica Semana Acadêmica 9, no. 208 (2021): 1–20. http://dx.doi.org/10.35265/2236-6717-208-9129.
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Internal audit is of utmost importance to organizations, playing a key role in decision making. The purpose of this article was to analyze the importance of internal auditing as a tool to prevent fraud and diversion of raw materials in a multinational. The company studied is dedicated to the purchase and grinding of grains. In order to do so, a case study was carried out, performing an analysis of the internal procedures of the company studied and a real audit during the two-year period of the company's operations. The data were collected through observations, interviews and documents made available by the company. The techniques used for data analysis were descriptive and documentary analyzes. This study reveals the importance of internal auditing, since it has tools that allow the identification and resolution of problems and risks of fraud and diversion through control, analysis and advice that meet the needs of an.
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Gissel, Jodi L. "Fraud Examination Case: Crafty Cash Theft?" Issues in Accounting Education 29, no. 2 (2013): 331–36. http://dx.doi.org/10.2308/iace-50554.
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ABSTRACT This case engages students in an interactive in-class learning activity. Students are given a brief case scenario and the task of investigating fraud in a small company. Pre-class preparations require students to identify likely fraud schemes and how to proceed with the fraud investigation. The in-class portion summarizes students' individual assessments and then emphasizes examination of evidence to resolve the case. The case challenges students to consider how to approach a fraud investigation and what procedures or analyses would provide relevant evidence. The activity also requires students to consider internal control weaknesses and suggestions for improving internal control in a small organization. The intended audience is a graduate-level fraud examination course or auditing course with a fraud examination component. Data Availability: Handouts and solutions are provided in the Teaching Notes.
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Trompeter, Gregory M., Tina D. Carpenter, Naman Desai, Keith L. Jones, and Richard A. Riley. "A Synthesis of Fraud-Related Research." AUDITING: A Journal of Practice & Theory 32, Supplement 1 (2012): 287–321. http://dx.doi.org/10.2308/ajpt-50360.
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SUMMARY We synthesize academic literature related to fraudulent financial reporting with dual purposes: (1) to better understand the nature and extent of the existing literature on financial reporting fraud, and (2) to highlight areas where there is need for future research. This project extends the work of Hogan et al. (2008), who completed a similar synthesis project, also sponsored by the Auditing Section of the American Accounting Association, in 2005. We synthesize the literature related to fraud by examining accounting and auditing literature post-Hogan et al. (2008) and by summarizing relevant fraud literature from outside of accounting. We review publications in accounting and related disciplines including criminology, ethics, finance, organizational behavior, psychology, and sociology. We synthesize the research around a model that illustrates the auditor's approach to fraud. The model incorporates auditors' use of the fraud triangle (i.e., management's incentive, attitude, and opportunity to commit fraud), their assessment of the existence and effectiveness of the client's anti-fraud measures (e.g., corporate governance mechanisms and internal controls), and their consideration of possible fraud schemes and concealment techniques when making an overall fraud risk assessment of the client. The model further illustrates how auditors can incorporate this assessment into an overall strategy to detect fraud by implementing appropriate fraud-detection procedures. We summarize the recent literature of each component of the model and suggest avenues for future research.
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Lavine, Michael K., Amelia A. Baldwin, and Charles L. Martin Jr. "Liberty Bell Hospital: A Case Study In Employee Information Systems Fraud." Journal of Business Case Studies (JBCS) 2, no. 3 (2006): 1–10. http://dx.doi.org/10.19030/jbcs.v2i3.4891.
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Information systems provide an attractive opportunity for dishonest employees in sensitive job positions to develop and implement a fraudulent scheme. Many different types of technical information systems controls help prevent these situations from occurring and can also detect occurrences after they have happened. However, in some cases, employees are able to circumvent critical segregation of duties. In addition, management of a company may override traditional internal controls in order to achieve business objectives. Overriding internal controls can produce an environment that is conducive to fraud.Internal auditors with an information systems specialty can often identify red flags prior to fraudulent acts taking place in the organization. This allows an organization to utilize preventive measures to reduce the likelihood of a fraud occurring. In a specific situation where an information system fraud is suspected, internal auditors are often charged with leading the investigation. This case analyzes an employee fraud involving a breakdown of internal information technology and management controls, falsification of business records, and a lack of segregation of duties. This case is designed for use in either an undergraduate auditing, information systems security, accounting ethics, internal auditing, computer ethics or other related class. Its primary purpose is to introduce students to a very common type of employee fraud and to illustrate how professional guidance can be applied in such a situation. While the case is based on a true situation, all identities have been modified to protect each individuals right to privacy.
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Antonio, Gregorius Rudy. "Continuous auditing: Developing automated audit systems for fraud and error detections." Journal of Economics, Business, & Accountancy Ventura 17, no. 1 (2014): 127. http://dx.doi.org/10.14414/jebav.v17i1.272.
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Indonesian Institute of Certified Public Accountants, American Institute of Certified Public Accountants and the Canadian Institute of Chartered Accountants(SAS 99 sec 110, par 2) establishes auditors responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis- statement, whether caused by error or fraud to plan and perform audits to provide a reasonable assurance that the audited financial statements are free of material fraud. This study proposed the development of Automated Audit System model to assist auditors in bridging them to the challenges in detecting fraud. This approach firstly provides a framework to have better understanding about the business process and data structures of information systems which is required in establishing an effective audit program. These ingredients are mapped in the audit process, including audit objectives, internal control and audit rules by using the Use-Case Diagram, Data Flow Diagram and Entity Relationship Diagram. Second, this study employs Ben- fords Law and Automatic Transaction Verification for the detection of anomalies and irregularities to design the framework. It also presents a systematic case study of ac- tual continuous auditing in department stores that using ERP systems. It is expected to detect frauds and errors. It proves that Continuous Audit and Benford Law can establish strong framework in Automated Audit Systems for Fraud Detections and finally provide a big contribution to internal control and company policies.
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Rito, Rito, Mulyaning Wulan, and Adityo Ari Wibowo. "Peran Satuan Kerja Audit Internal Dalam Mendeteksi Fraud Pada Perbankan Syariah Di Indonesia." Al-Urban: Jurnal Ekonomi Syariah dan Filantropi Islam 3, no. 2 (2019): 180–89. http://dx.doi.org/10.22236/alurban_vol3/is2pp180-189.
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Sharia Banking in Indonesia continues to strive to be able to maintain transparency and prevent fraud. The audit committee is a tool for the board of commissioners to help maintain the professionalism of the bank. Also Internal Audit or Unit of Work of Internal Audit (SKAI) in Sharia banking is needed to ensure that the company is operating in accordance with the Bank's Regulations and operational standards owned by each bank. Based on the International Standards for the Professional Practice of Internal Auditing, internal audit has a consulting and assurance role. Therefore, internal audit must have the skills, professional, independent and objective in carrying out its role. As one of the roles of assurance, internal audit can detect fraud. Fraud is an act of cheating that can be done by many groups, ranging from employees to top management that can harm the stakeholders. Several factors cause fraud, namely arrogance, competence, opportunity, pressure and rationalization. Types of fraud that can occur are corruption, misuse of assets, manipulation of financial statements and cybercrime.
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Gottschalk, Petter. "Evaluation of Fraud Examinations: A Contingent Approach to Private Internal Investigations." Policing: A Journal of Policy and Practice 13, no. 4 (2017): 386–96. http://dx.doi.org/10.1093/police/pax052.
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Abstract The business of private internal investigations by external fraud examiners has grown remarkably in recent decades. Law firms and auditing firms are hired by private and public organizations to reconstruct the past when there is suspicion of misconduct and potential financial crime. This article has presented an empirical study of 49 private internal investigations in Norway that were publicly available. A contingent approach to investigations was applied, where private investigations at later stages are facing different mandates than investigations at earlier stages in the criminal justice system. This research has been exploratory by indicating that fraud examiners make a higher level contribution at later stages in the criminal justice system.
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Hazami-Ammar, Sourour. "Internal auditors’ perceptions of the function’s ability to investigate fraud." Journal of Applied Accounting Research 20, no. 2 (2019): 134–53. http://dx.doi.org/10.1108/jaar-09-2017-0098.
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Purpose The purpose of this paper is to examine the relation between internal audit function (IAF) characteristics and organizational variables and IAF’s self-investigation about fraud and irregularities (SIFI) in the French context. Design/methodology/approach This paper uses the responses of 96 chief audit executives (CAEs) to a global survey of the internal auditing profession carried out by the Institute of Internal Auditors Research Foundation (IIARF) in 2010. A logistic regression model is used to determine factors influencing IAF’s SIFI. Findings The authors’ findings reveal that IAF’s SIFI is positively correlated to independence and objectivity, the number of activities performed by the function, adoption of a systematic approach to evaluate the effectiveness of risk management and the size of the company. Research limitations/implications This study examines the factors associated only to IAF’s investigation rather than assessment of the risk of fraud. It remains for future research to analyze determinants those related to internal auditors’ approaches when they evaluate the risk of fraud. Practical implications The findings have implications for CAEs who wish to improve the IAF’s ability to investigate fraud. Originality/value Even if the IIA has stipulated since 2009 that internal auditors must have knowledge to evaluate the risk of fraud, no disclosure requirement exists, in France, for IAF or its charter. The areas of research related to internal audit behavior in relation to fraud concern fraud risk investigation of financial fraud and management/employee misconduct.
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Marshall, Leisa L., and James Cali. "They Protect Us from Computer Fraud: Who Protects Us from Them? SafeNet, Inc.: A Case of Fraudulent Financial Reporting." Issues in Accounting Education 30, no. 4 (2015): 353–72. http://dx.doi.org/10.2308/iace-51120.
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ABSTRACT This case focuses on fraudulent financial reporting as related to the tone at the top, primarily the chief operating officer, Carole Argo, of SafeNet, Inc. (SafeNet). This case provides students a real-world example by which to apply basic fraud concepts including the fraud triangle, fraud prevention, and red flags (fraud symptoms). Students analyze SafeNet to identify deficiencies and prevention methods, from the perspective of COSO's (2013) Internal Control—Integrated Framework's internal control objectives, components, and principles. Students also analyze SafeNet's corporate governance structure by comparing SafeNet's Board of Directors and its subcommittees pre- and post-SOX. Students learn of stock options as a form of compensation. However, this case does not focus on the details of accounting for stock options. This case is appropriate for students with the financial accounting principles course background. This case was classroom tested in a basic fraud examination course and an internal auditing course. Students' responses in both courses support the use of the case as a learning tool.
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Clayton, Penny R., and Larry D. Ellison. "A Case of Declining Gross Margins." Issues in Accounting Education 26, no. 1 (2011): 133–43. http://dx.doi.org/10.2308/iace.2011.26.1.133.
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ABSTRACT: Based on the facts of an actual fraud investigation and utilizing dialog to creatively present materials that will hold the student’s interest, this case introduces students to financial statement fraud and highlights the internal controls of inventory and sales for a private business. It provides students the opportunity to complete financial statement analysis relating to gross margins, and students are asked to identify weaknesses in the company’s internal control system. Students are also asked to make recommendations for improvement in the form of a written memo. The case is simple but can be used to introduce the concept of fraud investigation and can stimulate lively classroom discussion concerning student perceptions of whether fraud is, in fact, taking place. It can be used with either introductory-level financial accounting classes or more highly developed accounting courses such as auditing or fraud examination.
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Akman, Vedat, Berkan Acar, and Cevdet Kızıl. "Auditing Techniques to Avoid Cost Accounting Frauds." EMAJ: Emerging Markets Journal 10, no. 1 (2020): 60–66. http://dx.doi.org/10.5195/emaj.2020.210.
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Today, we observe the importance of accuracy of financial statements in every corporation. Accounting scandals have caused important losses both in the macro and micro levels. This issue proves the significance of financial statement accuracy. This accuracy is provided by the trust environment. Therefore, it is necessary to provide the required environment of confidence for financial markets to improve and function effectively against increasing accounting frauds gradually. That can only be possible by using different auditing techniques, running inventory counting such as cash and stock, establishing strong internal controls, managing efficiently and benefiting from technology integrated auditing. The aim of this study is to investigate the most effective auditing techniques to avoid cost accounting frauds. In this research, the most effective auditing techniques for detecting and preventing fraud are investigated by using the case analysis method. Also, the well known scandals related with Olympus, Worldcom, Tesco, Sunbeam and Parmalat companies are examined as a part of the case analysis. Finally, recommendations and suggestions regarding fraud prevention methods are presented.
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Higgins, Huong Ngo. "Learning Internal Controls from a Fraud Case at Bank of China." Issues in Accounting Education 27, no. 4 (2012): 1171–92. http://dx.doi.org/10.2308/iace-50177.
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ABSTRACT This case provides an opportunity to discuss principles of internal control, the process by which an entity's board of directors, management, and other personnel provide reasonable assurance that fraud and theft are prevented and detected. The case also facilitates discussion of the unique corporate governance and internal control environments in China, a fast-growing economy. Readers will be asked to apply the fraud triangle theory to identify internal control weaknesses and to design control activities for preventing fraud. The case is intended for beginning auditing students, but is also suitable for a more general audience such as accounting, management, and business students at the M.B.A. or undergraduate level. The case introduces Bank of China (BOC) against the backdrop of China's banking sector. It describes the proliferation of non-performing loans in Chinese banks, the failure to report these loans correctly, and the way in which these conditions create a climate where fraud and theft might be easily hidden. These problems and the need for internal controls become evident in the description of a major fraud scheme at BOC. After relating this scheme, the case concludes by reviewing recent reform initiatives to modernize internal controls in Chinese banks.
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Eulerich, Marc, and Artur Kalinichenko. "The Current State and Future Directions of Continuous Auditing Research: An Analysis of the Existing Literature." Journal of Information Systems 32, no. 3 (2017): 31–51. http://dx.doi.org/10.2308/isys-51813.
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ABSTRACT Advances in information technology, especially the rise of the real-time economy and massive fraud scandals of corporations such as Enron, WorldCom, and Xerox, have led to significant changes in the business and risk environment of companies. As a consequence, requirements for the auditing profession have changed, and call for the use of new auditing technologies such as continuous auditing. Previous empirical literature has identified a high acceptance of continuous auditing by practitioners within internal audit departments and external audit firms. We conduct a content analysis of 100 continuous auditing papers from 38 different journals published between 1983 and 2015. Our literature review summarizes and classifies the existing literature on continuous auditing, examines the current state of knowledge of continuous auditing in AIS research, and suggests future research opportunities. JEL Classification: M40; M42; G34; G32; M4; G3.
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Juliana, Lufti, Razana Juhaida Johari, Jamaliah Said, and Ludovicus Sensi Wondabio. "The Effects of Tone at the Top and Professional Skepticism on Fraud Risk Judgment Among Internal Auditors in Indonesia." Management and Accounting Review 20, no. 1 (2021): 139–54. http://dx.doi.org/10.24191/mar.v20i01-07.
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Failure of the internal auditors (IAs) to appropriately apply fraud risk judgment could result in audit failure in revealing fraud and scandals. It leads to significant harmful consequences to the IAs’ profession. In carrying out their duties, IAs sometimes have to face top management pressure. Tone at the top becomes essential in creating an ideal working environment for the IAs. Moreover, the lack of professional skepticism has been one factor causing an auditor’s failure to achieve the optimal result in detecting fraud. The findings from 202 respondents revealed that the IAs who have high professional skepticism are more effective in making fraud risk judgments. However, the direct influence of the tone at the top on fraud risk judgment is not statistically supported. This new finding may help professional regulatory bodies and the internal auditing function consider the profile and its necessary environment to elevate fraud risk judgment to regain public trust in the profession.
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Li, Kaodui, Osei-Assibey Mandella Bonsu, Kwabena Evans Asare, Beraud Jean-Jacques Dominique, and Boadi Johnson. "Accountants Perception on Effectiveness of Corporate Fraud Detection and Prevention Methods in Ghana." International Journal of Accounting and Financial Reporting 8, no. 3 (2018): 78. http://dx.doi.org/10.5296/ijafr.v8i3.13398.
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The purpose of the study is to find out the perceptions of Accountants and Auditors on effectiveness of corporate fraud detection and prevention methods among selected financial Institutions in Ghana. The population samples of the study comprising Accountants and Auditors in a selected financial Institutions in Ghana using a structured survey of questionnaires.It was revealed in the study that, organizational quite utilized data mining, digital analysis, internal Control and improvement and fraud prevention and detection training in combating fraud. However, the findings also shows that, organization use of password protection, Cash Review, Annual Auditing, Whistle blowing policy were less often utilized even though having the highest rating of effectiveness. Accountants, Auditors and management of Financial Organizations should considering using the most effective prevention and detection methods like Cash Review, Annual Auditing, whistle blowing and installation of Password protection on computers based on the findings.The study contributes to the literature on the effectiveness of fraud detection and prevention methods particularly for West African Countries and other emerging nations. The study may be terrific to Practitioners regarding the assessment of the contemporary level of fraud detection and prevention methods on financial Institutions in Ghana and beyond.
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Gifford, Richard H., and Harry Howe. "Relating Operational and Financial Factors to Assess Risk and Identify Fraud in an Operational Setting." Issues in Accounting Education 26, no. 2 (2011): 361–76. http://dx.doi.org/10.2308/iace-10021.
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ABSTRACT The current literature and Statement on Auditing Standards (SAS) 99 emphasize the importance of relating operational factors to financial factors when evaluating the risk of fraud. The following case is based on an actual company and demonstrates how an understanding of the relationship between operational factors and financial reporting can aid an auditor in assessing risk and identifying fraud. The case also gives students an opportunity to directly evaluate internal control in an operational setting. The case is intended to strengthen students' critical thinking and analytical skills and to give them exposure to the importance of internal controls in an operational setting.
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Armitage, Jack, and Jillian K. Poyzer. "Academicians' And Practitioners' Views On The Importance Of The Topical Content In The First Auditing Course." American Journal of Business Education (AJBE) 3, no. 1 (2010): 71–82. http://dx.doi.org/10.19030/ajbe.v3i1.375.
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The research question addressed in this study is to compare and identify differences between academics teaching auditing classes and practicing accountants regarding the importance of topics covered in the first university auditing course. This is accomplished by surveying academics and practitioners regarding their perceptions of the importance of 41 topics addressed in current auditing textbooks. The results show the five most important topics, as ranked by professors, are audit risk, understanding internal control, evidence, financial statement assertions, and fraud awareness. The five most important topics as ranked by accounting practitioners, are audit risk, ethics, documentation, understanding IC, analytical procedures. Professors teaching auditing classes face a challenge ensuring they prepare students to enter the business world equipped with all the skills necessary to be successful. Auditing professors should give consideration to tapping into this wealth of knowledge provided by accounting professionals and reevaluate the emphasis in their current auditing class.
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Adhikari, Subash, Binod Guragai, and Ananth Seetharaman. "Market Response to Audited Internal Control Weakness Disclosures." Journal of Forensic Accounting Research 5, no. 1 (2020): 2–20. http://dx.doi.org/10.2308/jfar-19-016.
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ABSTRACT To help guard against weaknesses in internal control over financial reporting (ICFR), the Sarbanes-Oxley Act of 2002 requires certain filers to have their ICFR assertions audited. Beneish et al. (2008) show that market participants fail to react negatively to adverse ICFR audit opinions. This is puzzling because weak ICFR heightens the risk of fraud or materially misstated financial statements. Our study reexamines this issue for the time periods covered by Auditing Standard No. 2 (AS2) and Auditing Standard No. 5 (AS5). We too find no significant negative market reaction to the disclosure of adverse ICFR audits in the AS2 era. However, we show that markets react negatively for first-time disclosures of adverse ICFR audits after the adoption of AS5. Furthermore, in the AS5 regime, markets seem to differentiate between entity-wide versus account-specific ICFR weaknesses. We also show that correcting previous ineffective ICFR results in a positive market reaction. Data Availability: Data are available from sources cited in the text.
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Adhikari, Subash, Binod Guragai, and Ananth Seetharaman. "Market Response to Audited Internal Control Weakness Disclosures." Journal of Forensic Accounting Research 5, no. 1 (2020): 2–20. http://dx.doi.org/10.2308/jfar-19-016.
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ABSTRACT To help guard against weaknesses in internal control over financial reporting (ICFR), the Sarbanes-Oxley Act of 2002 requires certain filers to have their ICFR assertions audited. Beneish et al. (2008) show that market participants fail to react negatively to adverse ICFR audit opinions. This is puzzling because weak ICFR heightens the risk of fraud or materially misstated financial statements. Our study reexamines this issue for the time periods covered by Auditing Standard No. 2 (AS2) and Auditing Standard No. 5 (AS5). We too find no significant negative market reaction to the disclosure of adverse ICFR audits in the AS2 era. However, we show that markets react negatively for first-time disclosures of adverse ICFR audits after the adoption of AS5. Furthermore, in the AS5 regime, markets seem to differentiate between entity-wide versus account-specific ICFR weaknesses. We also show that correcting previous ineffective ICFR results in a positive market reaction. Data Availability: Data are available from sources cited in the text.
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Nerandzic, Branislav. "Internal control of enterprise." Privredna izgradnja 47, no. 1-2 (2004): 99–112. http://dx.doi.org/10.2298/priz0402099n.
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Outside the enterprise, internal control systems do not provide sufficient protection to investment decision makers from the possibility of great management fraud. However, the system of internal control is there to provide assurance for management of an enterprise that accounting information of an enterprise is reliable. Internal control systems, internal and external audit, never really had an exclusive task to protect an enterprise form fraud, or to protect the owner and wider public from management fraud. These days, especially, institutes for internal control and audit, are becoming modern management's instrument for running and managing business operations, and for permanent evaluation reliability of an enterprise. Internal control is a form of supervision of accounting and administrative controls, and something even more, it is a special value adding philosophy in an organization through its activities. Operational audit has exceeded internal audit. Operational audit is a widespread activity that is established to analyze organizational structure, internal control systems, and flow of a working process, wider evaluation reliability and management performance results. Operational audit is and instrument of business operations of an enterprise, management tool and its corrector. It measures the realization of an organization compared to its purpose and goals set. Operational audit deals with entire achievement of goals effectiveness of business procedures and internal control, performance of some managers and other non-financial aspects of business operations. Operational audit uses exceptional, special senses through logical auditing technique to realize the purpose of organizational goals, operations controlling processes, communication and information system.
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Millet-Reyes, Benedicte, and Nancy Uddin. "Board structure changes after accounting fraud: the case of Schneider Electric." CASE Journal 17, no. 3 (2021): 406–18. http://dx.doi.org/10.1108/tcj-04-2019-0036.
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Theoretical basis The impact of corporate governance on internal controls and quality of financial disclosures. Research methodology Analysis of a real financial fraud event for a non-US multinational corporation. The case relies on accessing and analyzing annual reports for the firm, both before and after the fraud. Additional information on industry governance characteristics are provided in the case itself so that students can compare the firm to the industry. Case overview/synopsis This business case is centered on the analysis of Schneider Electric, a French multinational corporation, which had to restate their financial statements in 2011 because of accounting fraud. Following this event, Schneider undertook major changes in their board structure to improve internal control mechanisms. This pedagogical business case familiarizes students with international differences in ownership and board structure and emphasizes potential corporate governance changes after financial statement fraud. Complexity academic level Managerial finance, corporate finance, international finance, auditing. This case is more appropriate for upper-level undergraduate and graduate courses.
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Kumar, Sanjay, Ashutosh Deshmukh, Jiangxia Liu, and Kathryn E. Stecke. "An Analysis of Trust, Employee Trustworthiness, Fraud, and Internal Controls." International Journal of Strategic Decision Sciences 4, no. 3 (2013): 66–89. http://dx.doi.org/10.4018/jsds.2013070104.
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We analyze important strategic relationships among trust, employee trustworthiness, fraud, and internal controls. A game is modeled between a manager and an employee, two rational decision makers. The manager makes control decisions based on the strength of controls and on employee trustworthiness, which are modeled as functions of monetary and psychic costs and benefits of committing and not committing fraud. We propose a rich definition of trustworthiness that incorporates an employee’s propensity to commit fraud and sensitivity to controls. Equilibrium strategies are identified that could be used to determine the best strategy and the optimum strength of controls to use by identifying trustworthy, untrustworthy, and opportunistically trustworthy employees. A relationship of trustworthiness with a probabilistic choice of controls by the manager is established. As the strength of controls increases, the trustworthiness of the employees also increases, but a minimum critical level of trustworthiness is required to make controls effective. A high level of control may be needed to deter fraud. Also, this increase in trustworthiness does not translate to a proportional reduction of controls by the manager. We caution against excessive investments in internal controls. A low strength control with high probability of controls may be a cost effective way to deter fraud. We also explore the interaction of controls strength with the losses to the manager when fraud is committed. We find that control is not always a viable strategy. Optimal payoffs indicate that, unlike simultaneous decision making, under sequential decision making, the manager’s best strategy is to choose controls and auditing an employee. Policy implications and managerial insights of these findings are discussed.
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Rufus, Robert J., and William Hahn. "Mountain State Sporting Goods: A Case of Fraud? A Case Study in Fraud Examination." Issues in Accounting Education 26, no. 1 (2011): 201–17. http://dx.doi.org/10.2308/iace.2011.26.1.201.
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ABSTRACT: This case, which is derived from an actual fraud occurrence, provides an opportunity for students to employ fraud theory and assess the three conditions generally present when fraud occurs, i.e., incentive, opportunity, and ability to rationalize. Specific applications include the major provisions of SAS No. 99 (American Institute of Certified Public Accountants [AICPA] 2002), e.g., professional skepticism, brainstorming, risk assessment, and communication of findings. The case is designed with a scientific perspective, proceeding through the five sequential steps of a fraud examination (validate the suspicion, create a hypothesis, test, refine, and communicate). The case also provides an opportunity for students to employ financial statement analysis, journal entry testing, indirect methods of income reconstruction, and other evidence-gathering techniques in a realistic context. Additional topics include business valuations, ethics, professional standards, types of engagements, internal control, agency theory, and alternative dispute resolution. This case is suitable for use in an upper-level undergraduate or graduate course in auditing or forensic accounting, as well as practitioner education.
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Endrianto, Wendy. "Optimization of Control Self Assessment Application to Minimize Fraud." Binus Business Review 7, no. 1 (2016): 59. http://dx.doi.org/10.21512/bbr.v7i1.1455.
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This article discussed a method that can be done by a company to minimize fraud action by applying Control Self Assessment (CSA). The study was conducted by studying literature on the topics discussed that were presented descriptively in a systematic manner through the review one by one from the initial problem to solve the problem. It can be concluded that CSA is one form of auditing practices that emphasizes anticipatory action (preventive) of the act of detection (detective) that the concept of modern internal audit which is carried more precise in application. It is one alternative that is most efficient and effective in reducing fraud.
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Mulyono, Imam, Jaswadi Jaswadi, and Siti Amerieska. "PENGARUH BRAINSTORMING DAN KEAHLIAN AUDITOR TERHADAP PENILAIAN RISIKO FRAUD DI PTN." Jurnal Akuntansi Bisnis Dan Humaniora 7, no. 1 (2020): 1–6. http://dx.doi.org/10.33795/jabh.v7i1.1.
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Tujuan dari penelitian ini, untuk menguji apakah brainstorming dan keahlian auditor berpengaruh terhadap penilaian risiko fraud, dengan brainstorming dan keahlian auditor sebagai variable independen, dan penilaian risiko fraud sebagai variable dependen. Sampel berjumlah 50 kepada Internal Auditor (Perangkat SPI) PTN dari 14 PTN di Jawa Timur, dengan mendistribusikan kuisioner 50 kuisioner dan 46 kuisioner yang direspon oleh responden. Metode analisis data yang digunakan adalah uji kualitas data, uji asumsi klasik, uji hipotesis dengan regresi linier berganda, berdasarkan hasil analisis data yang sudah dilakukan bahwa brainstorming dan keahlian auditor berpengaruh terhadap penilaian risiko fraud. Hasil penelitian menunjukkan bahwa brainstorming berpengaruh terhadap penilaian risiko fraud karena tanpa proses Brainstorming yang tepat, tugas dan kinerja auditor akan terancam, dan auditor mungkin tidak mampu mengidentifikasi risiko fraud selama penilaian risiko fraud serta dengan Brainstorming mendorong auditor untuk mengadakan diskusi dengan anggota tim audit tentang potensi materi salah saji karena fraud. Keahlian auditor berpengaruh terhadap penilaian risiko fraud karena penilaian risiko fraud harus dilakukan oleh Auditor yang memiliki keahlian dan pelatihan yang cukup sebagai Auditor dan bertindak sebagai seorang yang ahli dalam bidang akuntansi dan bidang auditing melalui pendidikan formalnya yang diperluas dengan pengalaman-pengalaman selanjutnya dalam praktik audit.
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Eulerich, Marc, Christine Georgi, and Alexander Schmidt. "Continuous Auditing and Risk-Based Audit Planning—An Empirical Analysis." Journal of Emerging Technologies in Accounting 17, no. 2 (2020): 141–55. http://dx.doi.org/10.2308/jeta-2020-004.
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ABSTRACT Due to rapidly changing risks in companies, a continuous alignment of internal audit activities with the relevant risks is required. Continuous auditing (CA) is one possible way to meet these requirements. Specifically, the internal audit function (IAF) could use CA as a methodology in order to add a continuous perspective to their risk assessment. This study examines factors associated with the use of CA information in the IAF's risk-based audit planning (RBAP). We use survey data from 264 chief audit executives to address our research question. We find several factors having a positive influence on the use of information from CA in RBAP. These factors include the importance of data analytics, the collaboration with the audit committee and external auditor, as well as the use of IAF's results for fraud prevention. Furthermore, our additional analysis presents various positive effects of CA on potential output measures of internal auditing. JEL Classifications: G30; G32; G34; M42.
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Uemura, Hiroshi. "Effects of CEO Turnover and Board Composition Reform on Improvements in the Internal Control Quality." International Journal of Financial Research 9, no. 3 (2018): 36. http://dx.doi.org/10.5430/ijfr.v9n3p36.
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Several serious accounting scandals have occurred in Japan in recent years (e.g., Olympus); however, the government, regulators, and auditing standard setters have struggled to identify new directions for corporate governance in listed companies, such as standard setting to address risks of fraud in an audit or the adoption of new corporate governance codes. The validity and effectiveness of monitoring by outside directors have received criticism within such a context. Nevertheless, in 2015, accounting fraud at Toshiba was discovered, which surprisingly involved upper management; the outside directors had failed to detect and prevent this fraud. Again, the monitoring function of the Japanese board of directors and outside directors was viewed with suspicion. Thus, this study examines Japanese corporations that disclose significant deficiencies (SDs) in internal controls over financial reporting (ICFR) and determines whether replacing the chief executive officer (CEO) and enhancing board members’ independence and financial expertise are followed by SD remediation. The results indicate that Japanese companies that disclose SDs in ICFR are more likely to replace their CEOs and enhance board independence. In addition, this study finds that although these actions do not affect SD remediation, upgrading the board’s accounting expertise does correlate positively with SD remediation. Moreover, if a company remediates a SD by increasing the number of accounting experts on the board, an increase in audit fees during the following term can be mitigated. These findings should be of interest to Japan’s regulators, auditing standard setters, and financial statement users when considering improvements in the quality of internal controls. In particular, these individuals must realize that the control environment is not improved in Japanese firms merely by replacing the CEO and increasing board independence, particularly because new CEOs encounter difficulties in changing the environment established by their predecessors.
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Pospíšil, Jiří, and Hana Vomáčková. "Education as a prevention of fraud." International Journal of Human Sciences 13, no. 1 (2016): 1133. http://dx.doi.org/10.14687/ijhs.v13i1.3638.
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A critical way of thinking developed by teachings of financial audit, accounting and taxation are necessary for any graduate in economics. Combined with ethics it is the essential prerequisite for increasing the resistance of the experts to embezzlement. The aim of this study is to ascertain whether the graduates of business schools in Czech Republic are ready to recognize and expose economic crime/fraud which they might encounter at their workplace. The readiness of the graduates is bilateral as it includes the ability "to recognize" which is discussed in terms of adequate knowledge - which should be obtained especially during the bachelor and master studies, and the willingness "to expose" which is discussed in terms of moral principles of the graduates - which should be augmented during their studies as well. The article summarizes the results of research conducted among Czech universities and their graduates. The research among the Czech universities was carried out as an analysis of the study programs provided by Czech universities and the corresponding syllabi. The research among the graduates was carried out via online questionnaire distributed to graduates through their alumni organizations. This questionnaire was accessible through the Internet from November 2014 to February 2015. During this period 264 respondents undertook the survey. We formulate two theses in this paper. First thesis states that Czech graduates are not equipped with knowledge necessary to recognize economic fraud at their workplace. Second thesis states that Czech graduates don't possess the moral incentives to expose the economic crime. While we were not able to confirm the first thesis unequivocally, we concluded that there is much to improve in the structure of the study programs of Czech universities providing business education. The second thesis was confirmed though. The suggestions we made in this paper based on the research were the following: firstly, to develop a syllabus of a new teaching subject which would incorporate the basic aspects of the advanced financial accounting, auditing, tax and business law and make such subject mandatory for all business graduates at Czech universities. Similar subject - even though less extensive/complex - shall be developed for the secondary business schools as well. Secondly, to eliminate the segmented ethics of secondary school graduates through education based on case-studies and demonstration and focus greatly on raising the ethics standards at both levels of business education.This paper is not a traditional field-based research study. Rather it is a summary/conclusive report on two interconnected research projects. The aim of this paper is to summarize the results from the former research projects and to compare andto confront the findings of these projects in the attempt to find a “common denominator” of both issues raised in the preceding research projects.