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The objective of this study is to evaluate auditors’ perceived responsibility for fraud detection. Auditors play a critical role in managing fraud risk within organizations. Although professional standards and guidance prescribe responsibility in the area, little is known about auditors’ sense of responsibility for fraud detection, the factors affe...
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Citations
... Given the importance of the role of audit expectations and, more specifically, the associated accountability effect, a significant amount of research has been conducted to examine their impact on audit judgments and performance. Previous studies (Lord, 1992;Glover, 1997;Brazel et al., 2004;DeZoort et al., 2006;Agoglia et al., 2009;Houston & Stefaniak, 2013;DeZoort & Harrison, 2018;Hoos et al., 2019) provided evidence that either type of audit review (e.g., face-to-face versus electronic review) or anticipation of the review process had a significant impact on auditor performance and the quality of audit judgments and justifications. However, most of these studies were conducted in developed countries. ...
This study aims to examine the role of accountability in audit review over auditors’ performance in an emerging setting which suffers from the ineffective implementation of the regulatory framework. An experiment was conducted where anticipation of audit review is being manipulated. Participants are senior auditors working in an audit firm with international affiliation. They were randomly assigned to one of two groups: review (accountable), or no review (non-accountable) to assess control and fraud risk and determine the type of the audit report. The results show that anticipation of audit review and related accountability feeling has no significant impact on auditors’ performance toward either risk assessment or reporting decisions. However, the performance of the review group’s participants was closer to that of a benchmark, and they were also more conservative in their fraud risk assessment compared to the no-review group. The findings suggest that less regulatory environments do not introduce sufficient pressure or monitoring over auditors to enhance their performance. The findings have implications for regulators and the accounting profession concerned with monitoring and promoting auditor performance.
... Professional accountants have increased their responsibility for detecting corruption and implementing robust anti-corruption mechanisms (DeZoort and Harrison, 2018). Professional accountants are now adept at resolving and managing financial issues related to bribery, corruption, money laundering, taxation and auditing (Masud et al., 2019). ...
Purpose
This study aims to investigate the determinants of anti-corruption disclosures by construction firms in Asia-Pacific countries.
Design/methodology/approach
The sample comprises construction companies from seven Asia-Pacific countries from 2015 to 2019. The authors hand-collected data on anti-corruption disclosures by using content analysis.
Findings
This study provides empirical evidence that government ownership, country-level accounting competence and high-quality auditors increase companies’ anti-corruption disclosures. Meanwhile, this study finds that uncertainty avoidance does not affect companies’ anti-corruption disclosures.
Practical implications
This study has a number of implications. First, government and professional accountant organizations need to improve accountants’ knowledge and competence through education, training and continuous professional development. Second, public accounting firms need to ensure the quality of their auditors, particularly in the technical competence in financial and nonfinancial reporting. Finally, universities must improve and update their curriculum regarding nonfinancial reporting issues.
Originality/value
This study is among the first to examine anti-corruption disclosure practices in the most corrupted settings, i.e. the construction industry in Asia-Pacific countries. It uses the isomorphism perspective to explain the influence of government ownership, country-level accounting competence and high-quality auditors on anti-corruption disclosure transparency. The number of prior studies investigating this association is very limited. Moreover, disclosures of anti-corruption information are complex and sensitive; thus, coercive, normative and mimetic pressures are required to achieve higher transparency and sustainability.
... Fraud will have a negative influence on public trust in organizations whose members commit fraud. Under these conditions, the role of external auditors is needed to be responsible for detecting indications of fraud (DeZoort & Harrison, 2018;Robinson, Robertson, & Curtis, 2012;Wolfe & Hermanson, 2004). Auditors with a high level of responsibility have a heightened concern for audit evidence that contradicts other evidence, information that raises questions about the reliability of documents, and circumstances that may indicate fraud (Standar Audit 200, 2012). ...
... Fraud detection responsibility is defined as the perception of government auditors about their responsibility in detecting fraud (DeZoort & Harrison, 2018). This variable is measured by the Triangle Model of Responsibility, adapted from DeZoort and Harrison (2018). ...
The government auditor plays a crucial role in the oversight and prevention of fraudulent activities inside the government. The examination of elements that influence the auditor's responsibilities in identifying fraud holds significant importance. This is also supported by previous literature, which states that there is quite a lot of understanding related to fraud behavior that has not been explored in the fields of accounting and auditing. This study aims to examine the influence of affective commitment, continuance commitment, normative commitment, and religiosity on the fraud detection responsibility of the auditor. The present study employed a quantitative methodology utilizing a survey-based research design. The participants in this research comprised a sample of 101 government auditors employed at the Audit Board of the Republic of Indonesia. The hypothesis was tested using Structural Equation Modeling-Partial Least Squares (SEM-PLS). The results showed that affective commitment, continuance commitment, normative commitment, and religiosity have a positive influence on the auditor’s responsibility in detecting fraud. This study also confirms the Theory of Planned Behavior (TPB). This research contributes to the development of literature related to behavioral accounting, especially regarding fraud detection responsibility. The implication of this research is that it is important for the audit board, especially human resource management, to consider providing activities that can increase the organizational commitment and religiosity of auditors, which can then be used as motivation for auditors to increase their responsibility in detecting fraud.
... DeZoort and Harrison (2018) explain that two significant forms of governance within an organization are designed to identify and manage fraud risk. The first form of governance is the organization's internal accountants and auditors, and the second is external auditors (DeZoort & Harrison (2018). Both the internal accountants of an organization and external and internal auditors have long been educated and are experienced in combatting accounting fraud efforts. ...
First, the paper will define fraud and analyze a fraudulent accounting situation and the responsibilities of a forensic accountant. Then, the paper will examine and analyze an accounting fraud case involving a money laundering scheme involving a retired couple who own a business and their son. Lastly, the paper will offer insight into the differences between an accounting audit and a fraud examination of financial statements and recommendations on what current fraud model offers the best explanation for the actions of the fraudulent retired couple.
... If done correctly, external audits could deter fraudulent management behaviour and mitigate information asymmetry risk, thereby protecting shareholders' interests (Guragai & Hutchison 2019). From that perspective, an external audit is a vital corporate governance mechanism introduced to address the agency problem, and external auditors' ability to detect material fraud is essential to ensure accountability and restore trust in corporate governance (Dezoort & Harrison 2018). ...
... Auditors and audit committees could ensure the reliability of financial statements and help reduce fraud risk. DeZoort and Harrison (2018) conclude that auditors are critical in managing organizational fraud risk, and fraud detection depend on internal auditors and external audit design (Ergin 2019). Buchanan, Commerford, and Wang (2020) find that increased auditor scrutiny with communication to the board effectively reduces fraud risk. ...
Evidence of football fraud and how it can be addressed is fragmented in the literature, lacking a holistic view. This paper provides a holistic understanding of fraud in professional football through a comprehensive framework that encompasses (i) the typologies and methods of perpetrating fraud in football, (ii) the enablers of football fraud, and (iii) how to mitigate fraud risk in professional football. Additionally, it highlights literature gaps and suggests new directions for future research to open up academic debates on this significant topic. The findings show no evidence of external fraud reported in the literature. However, insider fraud, particularly corruption in all its forms, is well documented. There is minimal evidence of other insider fraud types, such as asset misappropriation and financial fraud, and even fewer studies discussing fraud against football players and fans. The analysis highlights various fraud risk factors in football, ranging from financial and sporting performance, competitive balance, and financial regulation issues to the lack of accountability, anti-fraud controls, governance mechanisms, and weak integrity culture in FIFA and football clubs. The paper summarizes various other motives and opportunities enabling football fraud and proposes a holistic framework for mitigating fraud risk in football.
... In addition, Dezoort and Harrison [7], reported that fraud detection is an important role for internal auditors. This is achieve by instituting various forms of controls to reduce incidence of fraud and instil culture of honesty, ethics and integrity. ...
Globally, organizations have various challenges of fraudulent activities and exposure to fraud risk irrespective of size, location or sector. Fraud is not a new phenomenon, it occurred from centuries with numerous high profile cases, and these are perceived to have adversely affected company’s profitability, corporate governance, dividend, and business growth, this calls for study on how Internal Audit Values (IAV) can influence timely Fraud Detection (FD). Many researches have been conducted on fraud and FD, but not many considered the influence of IAV in their study. This study considered the probable influence of IAV on FD in Nigerian Manufacturing Industries (NMI). Survey research design was adopted with population study of 19,443 workers in ten selected industries in Nigeria manufacturing sector. 392 sample size was determined and questionnaire administered, this gives 86% response rate. Descriptive and inferential statistics were used to analyze data at 5% level of significance. The study revealed that IAV positively influenced FD (Adj.R2=0.857,F(3, 337)=667.489, p=0.000). The study concluded that IAV influenced and has significant impact on FD in NMI. The study further recommends that independence of internal audit and quality of audit team should be guaranteed. Opportunity that enhances capability should be flagged and promptly investigated, internal control mechanism should be re-enforced to mitigate fraud while technological monitoring devices should be adopted.
Keywords: Corporate governance, Fraud, Fraud detection, Internal audit value, Internal control
... Practitioners currently use the Fraud Triangle Theory (FTT) coined by Cressey to detect fraud. FTT is a theory of fraud that occurs due to three factors, namely pressure, opportunity, and rationalization [16]. Pressure is a factor that supports someone to commit fraud. ...
Fraud is one of the behaviors that are a problem in every country, both in developing and developed countries. This study aims to review financial statement fraud research development to provide findings on financial statement fraud trends in Indonesia. Researchers used a qualitative method with literature review techniques on several journals indexed by google scholar, garuda, sinta 2, and sinta 4 during 2016-2021 in Indonesia. The total number of studies reviewed was 15 journals. This study concludes that the three elements of the fraud triangle impacted financial statement fraud for eight company sectors during 2016-2021. Pressure, followed by opportunity and rationalization, has the most substantial impact on financial statement fraud. Meanwhile, external pressure, organizational structure, change in auditor, and auditor opinion do not affect the occurrence of financial statement fraud. These findings open up opportunities for future research to present literature on studies with a broader range of sectors and other fraud analyses (fraud diamond, fraud pentagon, and fraud hexagon) in Indonesia. This research aims to provide findings in a literature review of financial statement fraud trends in Indonesia.
... The results of research by [21] show that accountability and transparency have a significant effect on fraud prevention. This is also the same as reported by [22] and [23], that with the pressure of accountability one must be responsible for increasing the level of fraud detection. Based on the explanation above, the hypothesis of this research can be formulated as follows: ...
... These results also support the research of [16] which in his research on accountability in reducing corruption in public administration organizations, he found that accountability succeeded in reducing the occurrence of corruption effectively. In addition, [21], [22] and [23] also shows that accountability has a significant effect on fraud prevention. On the other hand, this results is not in line with the research of [30] and [31] who revealed that accountability has no effect on fraud prevention. ...
... The term of anonymity means removing accountability, while feedback is a situation where individuals expect an evaluation of formal feedback on their decisions or judgments (Bagley, 2010;DeZoort & Harrison, 2018;DeZoort, Harrison & Taylor, 2006;Evans, 2012;Mansouri & Rowney, 2014;Tetlock, 1985). Both types of accountability pressure are at an extreme point with contrasting discriminant results (Cloyd, 1997;DeZoort et al., 2006). ...
... In situations of accountability pressures, individuals understand that their actions will be compared to standards by evaluators. However, if expectations of behaviour are unclear and priorities are blurred, individuals will feel unaccountable and may behave unethically (Beu & Buckley, 2001;Iskandar et al., 2012;DeZoort & Harrison, 2018;DeZoort et al., 2006;Gong et al., 2014;Mansouri & Rowney, 2014;Yasmin & Ghafran, 2019). So, the effect of accountability is indicated by the subject regarding his choice to be accounted for by the parties concerned (Bagley, 2010;Brief et al., 1991;Gong et al., 2014;Hoos & Bollmann, 2012;Rich, 2004;Self et al., 2015;Tetlock, 1983) DeZoort et al. (2006 also stated that participants trying to make the right decisions feel the pressure gets stronger when the level of accountability pressure increases. ...
This study investigates the effect of ethical sensitivity on Ethical Decision Making (EDM) in an accounting context, with a laboratory experiment using a 2×2 between subjects involving 61 postgraduate students. It considers the person-situation interaction approach with rationalist-intuition as the basis of moral decisions. Our analysis reveals that ethical sensitivity affects EDM. Furthermore, accountability pressure interacts with ethical sensitivity to affect EDM. Our results are consistent with Rest (1986) model and Jones (1991) theory. EDM is affected by individual factors (ethical sensitivity) and organizational factors (anonymity and feedback accountability pressures). Our findings reveal that to improve EDM, organizations should increase the ethical sensitivity of their organizational members as well as set accountability pressures for them. Individu with high ethical sensitivity who are under the pressure of feedback accountability are more ethical in decision-making. This study employs students as subjects, the results should be interpreted cautiously. Future study should validate the findings using professional accountants as subjects or performing other research strategies, such as a qualitative approach, to answer why such phenomena exist.
