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The present paper aims at the identification of the critical variables of risk-based auditing (RBA). The variables under examination are the internal audit (IA), the audit committee (AC) and the cooperation between the RBA and the stakeholders (audit committee, external auditors, internal auditors, board of directors, fraud investigators, chief risk manager) (COOP).

A questionnaire survey was conducted among 176 Greek companies. The questionnaires were addressed to accountants, internal auditors, managers, chief risk managers and the board of directors. A total of 96 questionnaires have been collected and analyzed. PLS-SEM modeling was used as a tool to test hypotheses and analyze the findings.

The results show that three variables, i.e. the internal audit, the audit committee and the RBA cooperation with stakeholders have a statistically significant and positive effect on risk-based auditing (RBA). Additionally, the existence of partial-complementary mediation of the internal audit in the audit committee-RBA interaction is confirmed.

This study is an original research that identifies the essential variables of risk-based auditing in Greek companies. It attempts to analyze the perceptions of all stakeholders in risk-based auditing, including the internal audit, the audit committee, etc. and is not restricted only on internal auditors. Furthermore, the analysis is conducted with PLS-SEM Modeling, which is an innovative tool of testing hypotheses and analyzing results.

This study aims to examine the relationship between audit committee (AC) effectiveness and firm performance (FP) with the moderation of knowledge intensity while observing the varying effect of each AC characteristic’s influence on its effectiveness.

This study examines 133 companies covering five years from 2016 to 2020 using the partial least squares-structural equation model and weighing AC effectiveness-related characteristics through multiple regression between AC characteristics and the AC effectiveness construct.

The results indicate that the knowledge intensity of the firms negatively influences the relationship between their AC effectiveness and FP, implying that the ACs are not sophisticated enough to monitor the knowledge component of the firm’s assets. Among AC characteristics, six attributes have a significant positive impact, two have a negative impact and three have no significant influence on AC effectiveness while influencing FP.

Apart from guiding the regulators, managers and other stakeholders to choose an appropriate mix of AC characteristics for enhancing FP, the study contributes to the existing literature by providing evidence that ACs are ineffective in monitoring the knowledge assets of the company compared to physical assets.

This study is pioneering in investigating the moderation role of knowledge intensity on the relationship between AC effectiveness and FP. While providing a comprehensive and holistic view of AC effectiveness by considering 11 AC characteristics’ individual as well as aggregate effects on FP, it removes the obsolescence of earlier research in the Indian context owing to the latest regulatory reforms.

This study aims to investigate why and how shared service centres (SSCs) are implemented as well as how they affect audit firm practice and audit quality.

In this qualitative study guided by the theoretical framework of institutional theory, the authors conducted 25 semi-structured interviews in seven European countries, including 16 interviews with audit partners from Big 4 firms, 6 with audit team members, 2 with interviewees from second-tier audit firms and 1 with a member of an oversight body.

The authors show that the central rationale for audit firms to implement SSCs is economic rather than external legitimacy. The authors find that SSC implementation has substantial effects on audit practices, particularly those related to standardisation, coordination and monitoring activities. The authors also highlight the potential impacts on audit quality.

By exploring the motivation for and effects of SSC implementation amongst audit firms, the authors offer insights into the best practices related to subsequent change processes and audit quality.

Amid public acknowledgment of recurring ethical violations in the volatile financial service industry, internal auditing (IA) professionals do not seem to have done enough to perform their professional responsibility as a line of defense for their employing organizations. This chapter explores whether changes in an IA approach can effectively enable IA as a practice to fulfill its governance role in managing “conduct risk,” i.e., any behavior in a firm that could cause problems to consumer protection, market integrity or competition. We examine the ethical implications of the existing compliance-based IA approach and explain its ineffectiveness in auditing conduct risk within a turbulent environment. Using action research, we explain the germane changes necessary to define a new conduct-focused IA approach capable of predicting and preventing ethical wrongdoing. A conduct-focused approach launches auditors into unfamiliar but strategically critical areas to not only identify material risks but also add value to their organizations. The authors further examine how a change in the auditor’s mindset and other factors promote the effectiveness of the new IA approach in a sustainable way. This chapter contributes to the literature by investigating how internal auditors can better fulfill their professional responsibility when adopting a conduct-focused approach.

This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.

Leveraging a hand-collected data set of listed family firms from 2014 to 2020, this study uses regression analyses to investigate the impact of family ownership, family involvement on the board, family CEO and the generational stage of the family business on the quality of internal auditing.

The results provide evidence that family ownership is positively associated with the quality of internal auditing, while later generational stages of family businesses have the opposite effect. Additional analyses reveal that the presence of a sustainability board sub-committee moderates the relationship between generational stages of family businesses and the quality of internal auditing function.

This paper does not consider country-institutional factors and other potentially family-related antecedents or governance factors that may affect the quality of internal auditing.

The results are informative for investors and non-family stakeholders interested in understanding under which conditions family-related factors influence the quality of internal auditing functions.

This study offers fresh evidence regarding the relationship between family-related factors and the quality of internal auditing and board sub-committees that moderate such a relationship in family businesses.

The purpose of this study is to explore how the risk of management motives for fraud can be assessed in external audits.

Semi-structured interviews were conducted with 26 experienced external auditors to explore their perspectives on the methods they employ to assess the risk of management motives for fraud.

The study identifies six methods external auditors can use to assess management motives for fraud. It emphasises that assessing management motives requires auditors to go beyond understanding these motives and necessitates a sceptical and analytical mindset. Auditors need to identify the accounts most vulnerable to management manipulations, observe management attitudes and assess the credibility of management assertions. The auditors in this study highlight specific accounts frequently manipulated by management. Still, manual year-end journal entries are the most vulnerable to management manipulations as they are subject to fewer controls. They recommend increasing the sample size to 100% and assigning more experienced staff, particularly, those with qualifications in fraud examination or anti-fraud training, to audit these vulnerable accounts thoroughly. They also provided examples of how auditors can identify management motives for fraud, observe management attitudes and assess the credibility of management assertions.

Audit standards (e.g. ISA 240, SAS99) lack explicit guidance on assessing management motives for fraud, but auditors are required to consider it in fraud risk assessment. This study proposes guidance recommendations to improve auditors' ability to assess this risk, which could be integrated into professional audit standards and training materials to improve auditors' professional scepticism, ability to challenge management and skills in fraud risk assessment.

Assessing the risk of management motives for fraud in external audits has received limited attention in the literature. To the best of the authors’ knowledge, this study is the first to address this knowledge gap.

The purpose of this study was to determine the determinants of financial statement fraud: the perspective of pentagon fraud theory.

This study used quantitative methods with an explanatory research design by applying secondary data on Islamic banking companies listed on the Indonesia Stock Exchange (IDX).

External pressure affects financial statement fraud, ineffective monitoring affects financial statement fraud, external auditor quality affects financial statement fraud, change in auditor affects financial statement fraud, frequent number of CEO’s picture affects financial statement fraud, external pressure affects firm size, ineffective monitoring affects firm size, external auditor quality affects firm size, change in auditor affects firm size, frequent number of CEO’s picture affects firm size, firm size affects financial statement fraud, firm size mediates the relationship between external pressure on financial statement fraud, firm size mediates the relationship between ineffective monitoring on financial statement fraud, firm size mediates the relationship between external auditor quality and financial statement fraud, firm size mediates the relationship between change in auditor and financial statement fraud, firm size mediates the relationship between frequent number of CEO’s picture and financial statement fraud.

The limitations of this research were found during the research process and can be used as input for further research and related parties in conducting the research to obtain better research results. The limitations of this study are as follows: this study only focused on Islamic banking, so it cannot be generalized to other sectors. Besides, this study only tested five independent variables, one dependent variable and one mediating variable.

For external auditors, financial statement fraud by management might be caused by many factors and is a social as well as an economic problem that must be addressed immediately. Therefore, in carrying out the duties and roles as an external auditor, they must have an attitude of independence (not taking sides) in the mental attitude that must be maintained by the auditor related to the assignment. Auditors must have sufficient technical expertise and training as auditors. In carrying out the audit, the auditor should use their professional skills in responding carefully and thoroughly. Moreover, in carrying out audit work, the auditor must have a plan, must know adequate internal control and obtain sufficiently competent audit evidence.

To the best of the authors’ knowledge, very few studies in Indonesia have applied the Beneish model. There is only one study that implemented the Beneish model, and the study examined only a few companies listed on the IDX. The findings of the present study have important implications not only for banks but also for users of financial statement accounts in Indonesia, especially for investors, auditors, regulators, taxation and other state authorities.

The study applies Erving Goffman's (1974) “frame analysis” principles to examine how Sharia governance is practiced in Islamic banks and explores the interaction and strategies adopted by bank managers to influence the decisions of Sharia scholars. The study also aims to identify inherent flaws in the Sharia compliance review system.

The study employs the principles of Goffman as a lens to critically analyse a rich dataset obtained through interviews undertaken with 46 key players operating in the governance framework of the Malaysian Islamic banking industry due to its progressive Islamic governance framework.

The study demonstrates that managers of Islamic banks may engage in “passing” and “covering” strategies while interacting within the governance structure. Concurrently, Sharia boards (SBs) implement “protective practices” during their interactions, adding complexity to their responsibilities within the banks. Consequently, SBs cannot merely be viewed as instruments for legitimising banking operations. This raises questions about the “impression management,” “concealment” and “competence” strategies employed by managers and SB members, as suggested by Goffman's framework. These findings indicate that there is room for further enhancement in the governance practices of Islamic banks.

Future research could explore aspects related to the governance of Islamic banks, such as investigating the independence and effectiveness of internal Sharia officers. Examining the strategies employed during their interactions with external Sharia boards and other stakeholders could provide further valuable insights.

By highlighting shortcomings in the governance and compliance review process, the findings could serve as a valuable resource for policymakers. The insights derived could inform the development of regulations aimed at reducing opportunistic behaviour and promoting accountability in the Islamic banking sector.

This study uniquely employs Goffman's concepts of “frontstage” and “backstage” strategies to offer insights into the interactions between Islamic bank managers and SBs and the impact of these interactions on Sharia compliance. The study contributes to the understanding of the dynamics between key players in the governance of Islamic banks and the factors influencing their adherence to Sharia principles.

This study explores virtual platforms’ capabilities, particularly emphasising the influence of educational movies embedded with lifelike narratives to serve as a potent medium for immersive learning within the auditing discipline. Through this exploration, we aim to discern how cinematic depictions can educate and encapsulate the intricate dynamics of real-world auditing scenarios, thereby enriching the educational experience for budding auditors.

By employing an action research methodology, this study engaged 134 auditing students from China in an experiment, using a questionnaire to assess their grasp of auditing concepts like internal control, corporate governance, and professional ethics.

Preliminary findings underscore the efficacy of movies as pedagogical tools. These movie experiences bridge the gap between theoretical knowledge and its real-world application, particularly highlighting the nuances of professional ethics and corporate governance. Results show that such a method amplifies students’ comprehension of auditor skillsets, practical complications, and ethical insight and nurtures professional scepticism about tangible audit issues.

This study illuminates a novel virtual learning approach using movies that primes students to exercise critical thinking and augments cognitive skillsets, especially when navigating ethical conundrums. The broader implication is the potential enhancement of auditing education quality in China, presenting educators with an innovative teaching modality that bolsters students’ critical analysis and cognitive development.

This study has multiple implications for auditing education policy. It underscores the imperative need for curriculum revision in contemporary auditing education. Our study can significantly change contemporary auditing education by incorporating movie-based experiential learning. Educators and institutions in China and other parts of the world explore this avenue, customising it to fit the unique requirements of their respective courses and the country’s contexts. Our study also highlights the challenges and recommendations for real-world audit simulation for auditing education. While our research highlights the promise of educational movies, it also sheds light on the potential difficulties in their integration. Audit educators need adequate support and training for effective assimilation, ensuring they leverage educational movies to maximise learning outcomes. Careful curation and selection of movies, combined with strategic planning, are paramount to this teaching method’s success. With the continual evolution of video tools, there is an opportunity for a more immersive and holistic education model, shaping the next generation of auditors.

This study offers insights into innovative strategies to imbue real-world experience into traditional curricula, ensuring relevance and applicability across diverse educational landscapes.

This case examines critical ethical accounting practice issues surrounding a request for proposal for audit services at Aviary Corporation based on a real Securities and Exchange Commission enforcement action. Audit and tax partners at Western Accounting Firm, a large international public accounting firm, used confidential information obtained from the company’s Chief Audit Officer to modify their proposal for audit services. In response to their actions, the Securities and Exchange Commission fined the auditing firm, the partners, and the Chief Audit Executive. The authors used publicly available information and adopted fictitious names to develop a teaching case that instructors can implement in a variety of accounting and ethics classes to increase students’ understanding of professional codes of conduct and independence guidance.