Kassem, Rasha (2023). External Auditors’ Use and Perceptions of Fraud Factors in Assessing Fraudulent Financial Reporting Risk (FFRR) – Implications for Audit Policy and Practice. Security Journal ,
Abstract
This study used semi-structured interviews with twenty-four external auditors to explore how they perceive and use fraud factors when assessing fraudulent financial reporting risk in external audits. The fraud factors include top management’s motive, integrity, opportunity, rationalisation, and capabilities. The participants work for Big 4 audit firms and have international auditing experience, specifically in the US, the UK, Egypt, the UAE, Qatar, Bahrain, and Saudi Arabia. The findings reveal that top management’s integrity and motives are, in theory, the most critical factors in fraud risk assessment. However, a self-selection bias pushes external auditors not to evaluate these essential factors because they are too complicated to assess, and not enough guidance is provided to them by standard setters or audit firms. In turn, external auditors concentrate mainly on evaluating the opportunities to commit fraud when assessing fraud risk. This may lead to non-optimal fraud risk assessment and, ultimately, non-optimal audit quality. The findings have implications for policy, practice, and future research, later discussed.
Publication DOI: | https://doi.org/10.1057/s41284-023-00399-w |
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Divisions: | College of Business and Social Sciences > Aston Business School > Accounting College of Business and Social Sciences > Aston Business School > Centre for Personal Financial Wellbeing |
Additional Information: | Copyright © The Author(s), 2023. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/. |
Uncontrolled Keywords: | Accountability,Agency theory,External auditors,Fraud,Fraud risk assessment,Fraudulent financial reporting,Law,Safety Research,Strategy and Management |
Last Modified: | 09 Dec 2024 09:03 |
Date Deposited: | 04 Aug 2023 16:38 |
Full Text Link: | |
Related URLs: |
https://link.sp ... 284-023-00399-w
(Publisher URL) http://www.scop ... tnerID=8YFLogxK (Scopus URL) |
PURE Output Type: | Article |
Published Date: | 2023-09-23 |
Published Online Date: | 2023-09-23 |
Accepted Date: | 2023-08-22 |
Authors: |
Kassem, Rasha
(
0000-0001-5384-3800)
|
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Version: Accepted Version
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Version: Published Version
License: Creative Commons Attribution
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