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Financial statement fraud has become a global concern, and auditors are increasingly focused on identifying and investigating it. Auditors may play a crucial role in investigating and reducing financial statement fraud, and this is particularly important in developing countries where fraudulent practices are more prevalent due to the lack of strict regulations and oversight. This study investigates whether enhanced audit quality has an impact on reducing financial statement fraud. The primary aim is to recognize whether a higher level of audit quality relates with a decrease in fraudulent activities in Indonesia, which is one such country that has not yet adopted IFRS.

This study investigates the effect of audit quality, as measured by audit tenure, audit fee, and audit size, on the dependent variable of financial statement fraud, as indicated by Dechow F-value. The sample for this study comprises 951 observations from 2015 to 2020, and the research design utilizes a panel data approach. To test the main hypothesis, OLS, and GMM estimation techniques are employed.

The analyses reveal a negative relationship between audit tenure and financial statement fraud. This suggests that shorter audit tenure may be associated with an increased risk of financial statement fraud. This heightened risk could stem from auditors having limited time to thoroughly understand the company's operations and internal controls, potentially making it more challenging to detect and prevent fraudulent activities perpetrated by the client. Conversely, a positive relationship is identified between audit fees and financial statement fraud, suggesting that companies paying higher fees may be engaging auditors less adept at detecting fraudulent activities. Furthermore, a negative relationship is observed between Big-5 and financial statement fraud, which may be due to the greater resources, expertise, quality control, scrutiny, reputation, and ethical conduct of Big-5 audit companies.

This study only focused on listed companies in Indonesia, therefore, caution should be exercised when generalizing the findings to other developing and Muslim countries such as Malaysia. The findings may differ due to the adoption of IFRS in Malaysia. As such, it is important for future studies to include Malaysia as a sample and compare the results with those of Indonesia. This comparison would demonstrate the impact of IFRS adoption on the relationship between audit quality and financial statement fraud and provide insights for policy makers in Indonesia.

The findings of this study have important implications for developing countries that have been shown to be more susceptible to fraud than developed countries. This study contributes to the existing research on the role of audit quality in reducing financial statement fraud and emphasizes the need for auditors and accountants to take a proactive approach in detecting and investigating financial fraud.

This study is a new study because it investigates the relationship between audit quality and financial statement fraud in Indonesia, a developing Muslim country that has not yet adopted International Financial Reporting Standards (IFRS). The study provides valuable evidence on the unique factors that influence fraud in Indonesia and fills a gap in the literature as previous studies on this topic have largely focused on developed countries. Additionally, the study recommends that policymakers in Indonesia consider implementing IFRS to improve the reliability of financial reporting and strengthen the effectiveness of the auditing process, thus reducing the incidence of fraud.

This paper aims to test the effectiveness of the Haryono Umar (HU)-model used in corruption prevention strategies through corruption detection as a tool for detecting corruption because the mode of corruption is increasingly dynamic and complex by focusing on the causes of corruption: pressure, opportunity, rationalization, capability and lack of integrity.

The research uses multiple regression methods, classification and regression trees and the HU-model application system developed by researchers. The research sample uses secondary data from financial reports on the Indonesia stock exchange according to organizational clustering (such as red, grey and green areas).

The research result showed that of the 470 sample companies, there were 445 companies, or 98.9%, in the red cluster (indicated corruption), 19 companies, or 4.04, in the green clusters or not indicated corruption and six companies, or 1.28%, were included in the grey cluster or potential corruption. By knowing the cluster of an organization, efforts to prevent corruption can be made effective and efficient. Implementing the HU-model proves that the amount of pressure, the abundance of opportunities, the ease of rationalization and the high level of position and authority strengthen the drive for corruption if there is a lack of integrity.

Each internal organization can use this model independently and find conditions related to corruption so that they can immediately take action to prevent it.

The application of the HU-model is a discovery in preventing corruption by focusing on the possibility of corruption occurring in each organization through organizational clustering.

This paper aims to understand the impact of big data on the UAE audit profession. Mainly exploring whether the emergence of big data threatens the reliability of audit standards and whether audit standards need to be improved. Also, exploring the impact of big data on the collection of audit evidence.

Semistructured interviews were used to collect data, mainly targeting the audit-related workers of the Big Four and Non-Big Four audit firms in the UAE. Thematic analysis is adopted to analyze the original data, and the main factors affecting the audit standard and audit evidence collection.

This study found that the reliability of audit standards and the way audit evidence is collected can be affected by big data. It concludes that audit standards need to be improved and strengthened to include detailed essential elements associated with big data to ensure audit reliability, legitimacy and regularity. The results also identify the impact of big data on audit evidence in terms of adequacy, appropriateness, authenticity, consistency and reliability, as well as the impact on the validity and completeness of evidence collection. The research highlights the importance of big data skills and knowledge education, the contribution and challenges of big data to auditing, and the use of big data in future auditing.

This research provides specific empirical evidence from both Big Four and Non-Big Four audit firms in the UAE, which is lacking in the literature on the use of big data technology by auditors to assist audit works in UAE. It may serve as a reference for other researchers or those interested in relevant research.

This paper aims to examine how the allocation of audit hours to the year-round procedures, based on the risk of material misstatements in financial statements, impacts audit quality.

Using a data set on audit hours spent on year-round and year-end procedures, the authors build an empirical model for testing the effectiveness of year-round auditing of Korean public firms during the period of 2014–2018.

The initial tests do not show that proportionate increases in year-round procedures increase audit quality. However, after the authors control for the risk of material misstatements, the authors find that proportionate increases in year-round audit hours generally increase audit quality, except for high-risk firms where audit quality increases only as year-end hours proportionately increase. For high-risk firms, the results suggest that increases in year-round audit procedures occur at the cost of the essential year-end work. Similarly, except for high-risk firms, the authors find that the allocation of more audit effort to year-round procedures improves audit efficiency.

To the best of the authors’ knowledge, this study provides some of the first empirical evidence showing how a risk-based approach to allocating audit effort over the duration of an audit can impact audit quality and efficiency. Regulatory bodies, such as the International Auditing and Assurance Standards Board and Public Company Accounting Oversight Board, which consider the proper allocation of audit hours as a key audit quality indicator, should find the results useful.

In the context of an evolving digital-based global economy, this study aims to investige the impact of digital transformation (DT) on a firm’s internal control (IC) quality. It also explores how the personal traits of (CEOs) – such as age, gender and educational background – intersect with DT to shape the IC quality in various types of state-owned enterprises (SOEs).

The study uses the data from China A-shares non-financial enterprises, listed on Shanghai and Shenzhen stock exchanges between 2007 and 2020. Using the fixed effect regression method alongside various statistical techniques, such as propensity score matching, alternative analysis and instrumental variables analysis, yields robust findings. These methods effectively address issues related to functional form misspecification and potential biases from omitted explanatory variables.

The findings reveal a positive impact of DT on firm IC quality, and this impact is more pronounced in firms when the CEO is female, young and possesses a higher level of education. Notably, the study also distinguishes between central and local state-owned enterprises (SOEs), highlighting that DT has a greater influence on IC quality in central SOEs, where CEOs often have higher political ranks and closer to government monitoring. Overall, the findings are robust and consist to alternative variable and other statistical methods.

Following are the significant implications for both academia and business. First, firms that effectively adopt DT to enhance IC not only gain a strategic advantage over competitors but also establish efficient risk management practices and a robust IC system. Second, better IC resulting from DT can enhance investor and stakeholder confidence. This is particularly important for publicly traded companies, where investors and analysts closely scrutinize the robustness of IC systems. Third, DT could result in cost savings over time, as automation and streamlined processes may reduce the need for manual efforts and resource-intensive tasks associated with IC.

The findings are contributed to the literature in multiple ways. It enhances our comprehension of the intricate DT-IC quality relationship, and provides valuable insights into the transformative impact of DT on organizational operations and risk management. It also introduces a novel perspective by investigating how CEOs personal traits intersect with DT to shape IC quality, contributing to upper echelons theory. Furthermore, it expands the discussions on firm ownership by considering the types of SOEs (central vs. local), in the DT-IC quality context.

This study aims to conceptualize the UAE’s whistleblowing model by reviewing recent legislative updates directed toward removing potential legal deterrents, introducing legal protection and establishing numerous external whistleblowing channels. The study surveys these initiatives through the prism of the country’s unique socio-economic and judicial environments.

The study applies a conceptual approach to probe the potential impact of the UAE’s legislative initiatives on the country’s whistleblowing regime by connecting the demographic data, the UAE’s legal and regulatory frameworks, academic literature and media reports.

Recent legislative updates to the UAE whistleblowing regime are geared toward removal of potential legal deterrents, introduction of legal protection and establishment of external whistleblowing channels for reporting. These constitute the conceptual model of the UAE’s whistleblowing strategy, which is broad in scope and application yet may appear fragmented.

The study merges a comprehensive review of legislative initiatives and regulatory framework with academic literature to conceptualize the UAE’s whistleblowing model.

This study examines the effect of delegation of decision rights, moral justification (MJ), and ethical climate (EC) on managers’ misreporting in the financial services sector. We employed an online research panel called Qualtrics, to collect data based on a sample of 127 middle-level managers from various US financial services firms. We find that MJ mediates the relation between delegation and misreporting, suggesting delegation of decision rights increases employees’ misreporting indirectly by increasing MJ. We also find that EC significantly moderates the relationship between MJ and misreporting. Furthermore, our test of the moderated-mediation effect reveals that the indirect effect of the delegation of decision rights on misreporting through MJ is stronger when there is a higher level of instrumental climate (IC) and a lower level of principle climate (PC).

The purpose of this study is to provide a systematic review of research development on auditing in the European Union over the past decade and suggest future research directions.

Following the PRISMA protocol, the authors systematically reviewed the relevant literature and conducted a qualitative content analysis of 107 studies on auditing in the European Union published between 2012 and 2023.

The results indicate increased auditing literature in the European Union from 2012 to August 2023. Around 40% of the papers were focused on six nations: Germany, Spain, Italy, the UK, Sweden and France. Additionally, 35.5% of papers have been published in three major journals: Accounting in Europe, International Journal of Auditing and the European Accounting Review. Moreover, 82.24% of papers used quantitative methods, with a few using qualitative or mixed methods. Also, most of the studies in the sample endorsed the European Union’s auditing reforms, which included implementing a cap on nonaudit fees and enhancing the independence of audit committees. Contrary to this viewpoint, multiple studies have expressed disagreement with enforcing a total prohibition on nonaudit services, as certain services can enhance auditing quality. Similarly, other studies have contested the necessity of mandatory auditor rotation every 10 years, citing the significant additional expenses associated with this practice. Finally, further studies supported the European Union’s decision to make the joint audit voluntary, as it is related to high audit fees and low audit quality.

The limitations of this research primarily stem from the authors’ choices in selecting the database and defining the criteria for searching the studied papers.

This paper offers valuable insights into the future research prospects in the European Union’s auditing field. Hence, this analysis can be helpful for researchers and practitioners in developing this field based on future research recommendations and the identified themes.

To the best of the authors’ knowledge, this paper is the first study to systematically review the developments of the European Union auditing literature over the past decade.

The aim of this study is to examine the patterns of fraud present in Valeant’s 2014 and 2015 financial statements and determine through a risk management analysis whether these frauds could have been prevented. This analysis provides the opportunity to more effectively prevent financial statement fraud.

Data were collected from Valeant pharmaceuticals annual reports, financial statements reports and financial authority documentation. Based on these documents, this paper analyzes the different fraud schemes and investigate whether fraud could have been detected earlier by governance actors. In particular, this paper examines the firm’s financial statements three years before the fraud was detected by the Securities and Exchange Commission.

The analysis of financial statements reveals few clues and no alarming red flags three years before detection of the fraud. However, financial statement analyses were complex because of the many acquisitions the firm made in the years before.

This paper aims to contribute to the literature on fraud by investigating a case of financial statement fraud.