Search results

The study aims to explore the reasons behind external auditors' failure to detect and report fraud.

Semi-structured interviews were conducted with twenty-four experienced Big 4 auditors.

The present study reveals power issues within audit firms and how some dishonest audit partners deal with auditors' concerns at the higher echelons. It also shows how auditors are pressured and intimidated by audit clients when fraud-related issues are raised. Further, it sheds light on ethical, governance and regulatory issues inhibiting auditors’ ability to detect or report fraud.

This study advances the audit literature by adding practice-based evidence on why external auditors fail to discover fraud.

The results draw policymakers' attention to the issues that inhibit external auditors' ability to discover fraud in practice which could help policymakers develop effective interventions. Additionally, it provides several recommendations which could aid policymakers and audit firms in designing effective audit reforms to resolve the fraud detection deficit.

This is the first study exploring external auditors' views on their failure to detect and report fraud and how the conflict of interests operates in the audit practice.

Whistleblowing has received increasing attention and support in recent years as a means of detecting and correcting illegal, unethical or illegitimate practices in organizations. This study aims to examine the extent to which accounting students in Saudi Arabia, as prospective accountants, have the courage to blow the whistle.

A questionnaire survey was administered to a sample of final year accounting students in Saudi Arabia. The questionnaire contained four groups of questions aimed at exploring the students' reaction to whistleblowing, the whistleblowing channel that students prefer, the encouraging factors for whistleblowing and the factors that discourage whistleblowing from the students' point of view. The instrument questions were developed with reference to previous studies conducted in other countries.

The findings of the study revealed that accounting students have the courage to whistle the wrongdoing. What encourages students to blow the whistle is their perception that fraud and corruption is an unethical behavior which goes against religious values and that the wrongdoer must take appropriate punishment. However, there are some factors that negatively affect the students' courage to blow the whistle, the most important of which is the fear of retaliation, in addition to their feeling that the wrongdoer will not be held accountable.

A sample of accounting students from one university limits generalizing the results to the population of accounting students in Saudi Arabia. Future research could examine this issue using larger samples of students, employees or professional accountants.

This study serves the Saudi vision 2030, which aims to combat fraud and corruption which negatively affect economic development. This study sheds light on the encouraging factors for Whistleblowing, which must be strengthened, as well as the discouraging factors, which must be addressed to mitigate their impact.

This study explores whistleblowing in Saudi Arabia where there is no research on this topic. This study comes at the appropriate time, as Saudi Arabia is currently witnessing an increasing interest in combating corruption, whether in the public or private sectors, and has recently introduced several legislations, as well as initiatives to encourage citizens to whistle the wrongdoing.

Auditors’ skills and knowledge of data analytics and big data can influence their judgment at the audit planning stage. At this stage, the auditor will determine the level of audit risk and estimate how long the audit will take. This study aims to test whether big data and data analytics affect auditors’ judgment by adopting the cognitive fit theory.

This was an experimental study involving 109 accounting students as participants. The 2 × 2 factorial design between subjects in a laboratory setting was applied to test the hypothesis.

First, this study supports the proposed hypothesis that participants who are provided with visual analytics information will rate audit risk lower than text analytics. Second, participants who receive information on unstructured data types will assess audit risk (audit hours) higher (longer) than those receiving structured data types. In addition, those who receive information from visual analytics results have a higher level of reliance than those receiving text analytics.

This research has implications for external and internal auditors to improve their skills and knowledge of data analytics and big data to make better judgments, especially when the auditor is planning the audit.

Previous studies have examined the effect of data analytics (predictive vs anomaly) and big data (financial vs non-financial) on auditor judgment, whereas this study examined data analytics (visual vs text analytics) and big data (structured and unstructured), which were not tested in previous studies.

How can we explain the unresponsiveness of Internal Audit (IA) amid signs that fraud is arising and spreading within an organization? Internal auditors are entrusted with the formal responsibility of sounding the alarm about the risk of fraud and organizational wrongdoing. However, internal auditors failed to respond as the cross-sell fraud at Wells Fargo’s Community Bank (CB) Division unfolded over more than a decade, growing into a massive, full-fledged scandal. We examine IA as a profession and explore how the interpretation of three classic tenets of auditing (scope, compliance and materiality) may enable organizational wrongdoing to fester unattended until it erupts into yet another scandal. We conclude with implications for the socialization and practice of internal auditors, emphasizing the need for reflexivity and moral judgment in the interpretation and application of tenets so deeply ingrained in the IA profession.

This study aims to increase awareness and educate the reader about health-care fraud targeting seniors in the USA to help stakeholders better understand, recognize and prevent this type of fraud.

This paper collects statistics on the current state of health care frauds committed against seniors, and examines related cases and laws.

The authors find this type of fraud is highly prevalent and expected to increase. Current laws preventing this fraud from occurring are multifold and complex. While prevention strategies through law enforcement have been somewhat successful, a reduction in resources may put seniors at an increased risk in the years to come.

Without additional prevention strategies, the problem will likely escalate with a growing population of older adults. This study encourages further research into effective prevention strategies and methods to fight health-care fraud against seniors.

Health-care fraud and its associated costs pose a significant threat to the society and economy of the USA. Reducing this fraud will not only reduce the costs to the US economy but also improve the physical and mental well-being of senior victims, reduce their mortality and hospitalization rates and improve the public trust placed to health-care providers.

This study highlights how health-care fraud is committed against seniors. With the projected trend of an aging US population, educating stakeholders, increasing awareness and applying tools to protect seniors will be important to reduce the absolute scope of this problem in the future.

To complete this case, students will need to access financial statements from the Securities and Exchange Commission’s webpage. The links are provided. Students will also need to review the conceptual framework that is typically covered in Intermediate 1 to respond to question 5.

This case is based on the three financial statement restatements that Weatherford International Ltd. made over an approximately 18-month period. The restatements were due to a fraud committed by manipulating the income tax accrual in the financial statements. The manipulation used was to overstate the amount of income used to calculate the dividend exclusion and then use a relatively high tax rate to calculate the resulting tax benefit. The tax rate used for the fraud was substantially more than Weatherford’s effective tax rate (ETR), which was a prominent part of the company’s strategic growth plan. The tax senior with the external auditors who reviewed the entry made for the dividend exclusion captured the inconsistency with the comment that “This [the entry] deserves a huh?” The case is intended for students in Intermediate 2, where financial statement restatements and their effect on the company’s financial statements are typically covered. During the years covered in this case, Weatherford was also under investigation for violations of the Foreign Corrupt Practices Act (FCPA). Weatherford’s FCPA violations included multiple instances of bribery, the inappropriate use of volume discounts, improper payments and kickbacks in the United Nation’s Oil for Food program. Weatherford received the eighth-largest fine in the history of FCPA violations (at that time) of $152m. Weatherford’s FCPA investigation expanded, and the company paid another $100m in fines for violations of sanctions law and export control law. This case focuses only on the fraudulent manipulation of the financial statements through the tax accrual and does not delve into the other investigations. However, the linkage between those investigations and the fraud in this case is Weatherford’s nonexistent internal controls.

This case was designed to be used in Intermediate 2 financial accounting classes to highlight financial statement restatements and review the conceptual framework and materiality. The students who used the case did not have difficulty with the tax aspect of the case. However, most of the students had taken one tax class previously or concurrently. If students have not had any exposure to tax, the instructor might want to walk students through the tax aspects of the case.

This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.

This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.

The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.

This study outlines directions for future accounting research on fraud.

The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.

This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.

The purpose of this paper is to understand if forensic accounting techniques and tools could contribute to the deterrence of fraud in financial statements, considering the expertise of forensic accountant on ex post activities and that the traditional mechanisms to prevent this type of fraud have not been sufficient to stop the impact on companies, investors, auditors, employees and on society in general.

This research was carried out using a qualitative exploratory study with a phenomenological approach conducted through in-depth interviews with professional experts in the forensic field.

The findings confirm that the use of forensic accounting techniques and tools could contribute to the prevention of fraud in financial reporting not only when the risk of fraud has been materialized. Similar studies, about fraud prevention addressing the situation under a qualitative approach from the perspectives of its protagonists, have not been observed in the bibliographical review, so this research contributes to expanding the scientific research, the study and practice of forensic accounting.

From a business management perspective, this study contributes a paradigm shift from the traditional ex post forensic auditing activity toward an ex ante activity to improve management control systems within organizations anywhere in the world. Because this study is guided to prevent fraudulent financial statements, other fraud categories such as misappropriation or corruption could be addressed in other studies and various countries.

Corporate Social Responsibility (CSR) reporting has been widely accepted as a vital tool for communicating with stakeholders on a range of social, environmental, and governance issues, but how companies define, interpret, apply, integrate, and communicate their CSR efforts and impacts in corporate reporting is anything but a straightforward task. The purpose of this chapter is to explore the concept of materiality in CSR reporting and demonstrate practical examples of good CSR and Sustainable Development Goals (SDGs) reporting practices. We chose the aviation industry because of its economic relevance, constant growth, and future expected changes in the aftermath of COVID-19. In addition, airlines affect many of the SDGs directly and indirectly with contending results. This chapter is timely because of the growing willingness by companies to integrate CSR and environmental, social, and governance (ESG) thinking into the corporate strategy and business operations using materiality assessment and enhancing their competitive advantage and ability to maintain long-term value and because ESG and ethical investing have become part of the mainstream investing. Thus, this chapter contributes to an understanding of the wide range of existing and new reporting frameworks and regulations and reinforces the importance of discussing how this diversity of approaches can affect the work toward worldwide comparability of CSR and sustainability reporting.

This study aims to objectively synthesize the volume of accounting literature on financial statement fraud (FSF) using a systematic literature review research method (SLRRM). This paper analyzes the vast FSF literature based on inclusion and exclusion criteria. These criteria filter articles that are present in the accounting fraud domain and are published in peer-reviewed quality journals based on Australian Business Deans Council (ABDC) journal ranking. Lastly, a reverse search, analyzing the articles' abstracts, further narrows the search to 88 peer-reviewed articles. After examining these 88 articles, the results imply that the current literature is shifting from traditional statistical approaches towards computational methods, specifically machine learning (ML), for predicting and detecting FSF. This evolution of the literature is influenced by the impact of micro and macro variables on FSF and the inadequacy of audit procedures to detect red flags of fraud. The findings also concluded that A* peer-reviewed journals accepted articles that showed a complete picture of performance measures of computational techniques in their results. Therefore, this paper contributes to the literature by providing insights to researchers about why ML articles on fraud do not make it to top accounting journals and which computational techniques are the best algorithms for predicting and detecting FSF.

This paper chronicles the cluster of narratives surrounding the inadequacy of current accounting and auditing practices in preventing and detecting Financial Statement Fraud. The primary objective of this study is to objectively synthesize the volume of accounting literature on financial statement fraud. More specifically, this study will conduct a systematic literature review (SLR) to examine the evolution of financial statement fraud research and the emergence of new computational techniques to detect fraud in the accounting and finance literature.

The storyline of this study illustrates how the literature has evolved from conventional fraud detection mechanisms to computational techniques such as artificial intelligence (AI) and machine learning (ML). The findings also concluded that A* peer-reviewed journals accepted articles that showed a complete picture of performance measures of computational techniques in their results. Therefore, this paper contributes to the literature by providing insights to researchers about why ML articles on fraud do not make it to top accounting journals and which computational techniques are the best algorithms for predicting and detecting FSF.

This paper contributes to the literature by providing insights to researchers about why the evolution of accounting fraud literature from traditional statistical methods to machine learning algorithms in fraud detection and prediction.