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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.

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.

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.

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.

The findings have implications for CAEs who wish to improve the IAF’s ability to investigate fraud.

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.

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.

This study aims to determine the fraud risk factors perceived by employees to have the greatest influence on individuals committing fraud as an unethical conduct, as well as to analyze employees’ opinions on fraud prevention program.

The fraud risk factors in this study are based on the concept of the fraud triangle as developed by Donald Cressey, as well as examples of situations set out in SAS No. 99. The samples used in this study are company employees who have been selected using the convenience sampling method.

A survey of 109 employees reports that none of the three factors (pressure, opportunity and rationalization) has a significant influence on fraud. However, when comparing the factors, the pressure is considered to have the highest impact. In terms of fraud prevention, the employees suggest that it is extremely important to implement all prevention tools, especially with regard to the adequate segregation of duties.

Limitations of this study in terms of method and small samples are expected to inform future studies to overcome the limitations by using other methods such as interview and by collecting more respondents to gather their perceptions and opinions.

This study contributed to the literature in confirming the pressure as the dominant factor and in confirming the importance of anti-fraud programs as suggested by the agency theory.

This study aims to examine how auditors respond to the revelation of clients’ corporate fraud.

This study uses an ordinary least squares estimation to examine how audit fees and audit turnover change after the revelation of corporate fraud.

After a client discloses fraudulent activities, average audit fees significantly increase due to an increase in audit hours, rather than in audit premiums. Both new and continuing auditors increase audit hours for fraud firms, but only new auditors charge higher audit fees for the increased effort. In addition, when auditors are designated by regulators following the revelation of fraud, audit fees and premiums increase, but audit hours do not. Finally, auditor turnover becomes more frequent after the revelation of fraud. Overall, the findings suggest that auditors update their assessment of audit risks after fraud revelation and, thus, adjust their audit pricing and client acceptance decisions.

The study provides regulators and audit practitioners with insights into how to audit contract characteristics and regulatory intervention (auditor designations) affect auditors’ response to increased audit risks.

The study contributes to the auditing literature and practice by providing evidence on how auditors respond to the revelation of fraudulent activities and how their response depends on their ability to determine audit fees. Moreover, we provide novel evidence that audit contracting characteristics and regulatory requirements result in different responses of auditors toward changes in audit risks.

The purpose of this paper is to investigate how the brainstorming component of Statement of Auditing Standards (SAS) No. 99 influences decision aid use and reliance, and the effectiveness of fraud risk assessment.

The research framework links the influences of the fraud assessment setting and decision aid reliance. The hypotheses are tested in an experiment with two manipulated factors: setting (group or individual) and decision aid (provided or not provided).

The results of the study provide insight on how the brainstorming impacts fraud risk assessment, decision aid use and decision aid reliance. The results show that groups using a decision aid with fraud risk factors demonstrate superior decision quality and effectiveness even with lower decision aid reliance.

The influence of the setting (group or individual) on the fraud evaluation and detection is highlighted.

This paper will be informative for auditors and firms involved in designing an efficient and effective fraud risk assessment.

This paper integrates the fraud risk assessment and decision aid literature to evaluate decision quality and effectiveness of group fraud risk assessment.

This study examines the effects of key audit matter (KAM) disclosures in auditors' reports on auditor liability in cases of fraud and error misstatements using evaluators with audit experience.

The experiment is conducted using 174 professional auditors as participants.

The participating auditors assess higher auditor liability when misstatements are related to errors rather than when they are related to fraud. In addition, the results also demonstrate that KAM disclosures reduce auditor liability only in cases of fraud and not in cases of errors. Together, the results support the view that KAM reduces the negative affective reactions of evaluators, which in turn, reduce the assessed auditor liability.

This study did not analyze the setting in which auditors who act as peer evaluators had an opportunity to discuss the case among their peers, which may have affected their judgments.

The results of KAM disclosures on auditor liability in cases of error and fraud misstatements inform auditors that, different from the auditors' concern that disclosing KAM may increase auditors' legal risk, it tends to decrease or at least have no impact on the liability judgment.

This study contributes to the accounting literature by adding findings on another aspect of KAM in different audit settings, particularly, in the Thai legal environment with different types of undetected misstatements. The current conflicting results on how KAM disclosures affect auditor liability warrant further investigation of this issue in other audit contexts in different countries.

This study tests a research model for promoting understanding of the responsibility attribution process.

A between-subjects experiment was conducted to test the hypotheses.

The results reveal that counterfactual thinking about how a system failure could have been prevented moderates the effect of cause of misstatement on perceived control. Counterfactual thinking about how an audit failure could have been avoided also moderates the effect of perceived control on causal account. Additionally, causal account mediates the effect of perceived control on responsibility judgment of an audit firm. Inclusion of audit firm size and auditor systems competency as control variables in the hypothesis tests and as grouping variables in the invariance tests does not alter the model results.

Research can guide the audit profession on development of innovative strategies for detecting fraud to protect the interests of decision-makers. Strategies can also be devised to prompt users to consider relevant factors to enhance their ability to arrive at an accurate assessment of an audit firm’s responsibility for an audit failure.

Regulators may need to address whether availability of advanced data analytic tools increases the audit firms’ responsibility for presenting convincing evidence suggesting due diligence in the audit work in the event of an audit failure.

This study examines the process variables influencing responsibility judgment of an audit firm. Elicitation of counterfactual thoughts before the participants responded to the questions measuring the process and dependent variables facilitates discernment of the intensity of counterfactual thinking on the variables examined in the research model.

The purpose of this paper is to argue for an integrated explanation of financial fraud. Greater emphasis must be placed on the structural and situational factors that are the elements of fraud risks and fraud.

The paper is based on a review of the literature on the explanation of financial fraud. Both micro- and macro-theoretical explanations of fraud were analysed to allow for a broader picture of the types of individuals that were involved in fraud, the rules governing their conduct and the types of law they broke.

The main reason why people commit fraud is that their crime propensity interacts with the elements present in criminogenic environments. Indeed, because most of the research on structural theories of fraud focuses on general criminality, not much has been done in the area of financial fraud. More research needs to be carried out to excavate the subterranean cluster of narrative on fraud risks and fraud.

To address the future contingency of fraud risks, the paper adopted a similar position of prior accounting research on financial crimes. The structural explanation of fraudulent behaviour considers individuals’ actions to be less the result of individual deviance and more the cause of societal forces. Structural theories take into consideration the individual psychology of the offenders and position it to reflect the various realities – institutional, structural and cultural life – they are caught up in. Future research must endeavour to address these concerns.

The manuscript is among a new stream of literature that addresses the structural elements of financial fraud.

This study aims to identify the intellectual structure of expanded audit reporting (EAR), offers a quantitative summation of prominent themes, contributors and knowledge gaps and provides suggestions for further research.

This research uses various bibliometric techniques, including co-word and co-citation analysis for EAR science mapping, based on 123 papers from Scopus Database between 1991 and 2022.

The results show EAR research is focused on Audit Quality; Auditor Liability and Litigation; Communicative Value and Readability; Audit Fees; and Disclosure. Regarding EAR research, Brasel et al. (2016), article is the most cited paper, Bédard J. is the most cited author, Laval University is the most influential university, The Accounting Review is the most cited journal and USA is the leading country. Furthermore, the results show that in common law countries, in which shareholder rights and litigation risk is high, topics such as disclosure quality and audit litigation have been addressed more; and in civil legal system countries, which usually favor stakeholders’ rights, topics of gender diversity or corporate governance have been more studied.

This research has practical implications for standard setters and regulators, who can identify important, overlooked and emerging issues and consider them in future policies and standards.

This paper contributes to the literature by providing a more objective and comprehensive status of the accounting research on EAR, identifying the gaps in the literature and proposing a direction for future research to continue the discussion on the value-relevance of EAR to achieve more transparency and less audit expectation gap.

The purpose of this paper is to report the findings and lessons learned from a case study that is based on Alibaba's business‐to‐business (B2B) fraud in China. The influence of such incidents and post‐hoc solutions are research worthy in today's booming digital business world.

The paper uses a case study approach and practice‐driven method that rely on user behaviors, corporate policies, and financial data. The taxonomic framework of online fraud and corresponding countermeasures arise from digital forensic reports, policy reviews, data analysis, and a literature review.

The key findings are indigenous to the Chinese B2B landscape, yet they help international stakeholders understand and address fraudulent issues. The paper finds beside the traditional customer‐based account signature, internal employees must be assigned their own signature systems to track malicious activities. Meanwhile, digital signature systems can be enhanced by reducing the record inter‐arrival time. Policy revisions are proposed to (e.g. offshore companies) lead to the decrease in the number of fraudulent incidents.

The paper extends existing understanding of online fraud by studying a Chinese case. The findings are timely and based on real world experience. Actual practices are discussed and evaluated. A range of fraudulent activities is reviewed in a comprehensive framework. The findings are important due to the public exposure and wide implications of such an incident. Also, this study reveals that fraud protection is an on‐going effort requiring a triangulation of technical artifacts, policy management, and operations management.