How could external auditors assess the rationalization of fraud?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rasha Kassem
Keyword(s):  
Design Methodology ◽  
Regulatory Environment ◽  
Online Questionnaire ◽  
Content Type ◽  
External Auditors ◽  
Fraud Risk ◽  
Big 4 ◽  
Audit Firms ◽  
The Board Of Directors ◽  
Practical Implications

Purpose This study aims to explore methods that external auditors can use to assess the rationalization of fraud in fraud risk assessment in auditing. Design/methodology/approach An online questionnaire was used to collect data from 150 Big 4 auditors. Findings The results reveal a total of 18 methods that auditors can use to assess the rationalization of fraud. However, some methods were recommended more than others by the auditors in this study. These methods include incorporating the assessment of rationalization into the assessment of motives for fraud and integrity, understanding the client’s business and regulatory environment, inquiring management and the board of directors about past fraud cases and observing management responses and reactions during auditors’ inquiry about fraud-related matters. Practical implications The guidance provided by this study could help enhance auditors’ skills in assessing fraud risks, which, in turn, may increase the likelihood of detecting fraud. The guide could also be helpful for audit firms in their fraud training programs. Originality/value This study is the first to explore methods for assessing the rationalization of fraud by drawing on the experience and insights of Big 4 auditors.

Key audit matters: did IAASB unravel the knots of confusion in audit reports decisions?

2021 ◽  
Vol 36 (8) ◽  
pp. 1025-1052
Author(s):  
Mohamed Abdel Aziz Hegazy ◽  
Noha Mahmoud Kamareldawla
Keyword(s):  
Design Methodology ◽  
Financial Statements ◽  
Reporting Standards ◽  
Content Type ◽  
External Auditors ◽  
Big 4 ◽  
Audit Firms ◽  
Audit Reports ◽  
The Relationship ◽  
Practical Implications

Purpose This study aims to investigate how external auditors properly classify the requirements of ISA 701 for key audit matters (KAM) compared with an emphasis of matter or other matters (EOM) in ISA 706 and going concern (GC) in ISAs 706 and 570. Such investigation is important to assess whether the explanatory matters included in ISAs 701, 706 and 570 are appropriate for external auditors so they can properly classify identified audit matters as either KAM, EOM or GC matters and considering the relationship among them. Design/methodology/approach The research used questionnaires sent to a sample of external auditors in five audit firms with international affiliations including two of the Big 4 audit firms. The Z-test for two proportions is conducted to assess whether external auditors were confused when interpreting the explanatory matters included in the ISAs. Findings The research suggests that the current ISA 701 explanations may not adequately help some auditors in their aim of properly identifying all KAM from among the different matters they reach during their audit. When classifying EOM and GC, most of the external auditors misclassified them as KAM. Practical implications This is a timely study. The results have implications for standard setters and regulators through revising the explanations included in the different audit reporting standards including ISA 701 and considering the relationships among them. Originality/value According to the authors’ knowledge, this study is considered among the first that surveyed the appropriateness of the explanations included in ISAs for KAM, EOM, GC and how auditors perceive such explanations when forming their opinion about their clients’ financial statements.

Auditors’ judgment subordination and the theory of planned behavior

2020 ◽  
Vol 35 (8) ◽  
pp. 1189-1211
Author(s):  
Dominic Cyr ◽  
Sylvie Héroux ◽  
Richard Fontaine
Keyword(s):  
Theory Of Planned Behavior ◽  
Planned Behavior ◽  
Design Methodology ◽  
Cash Flows ◽  
Content Type ◽  
Audit Firm ◽  
Factors Associated ◽  
Big 4 ◽  
Audit Firms ◽  
Practical Implications

Purpose The purpose of this paper is to examine circumstances under which auditors subordinate their judgment. More specifically, the authors investigate factors associated with auditors’ propensity to accept client-preferred accounting methods that conform to accounting standards but do not faithfully represent the entity’s financial position, financial performance and cash flows. Design/methodology/approach Based on the theory of planned behavior (TPB), the authors developed a survey that was sent to auditors at a non-Big 4 audit firm. Findings Main results suggest that auditors tend to agree with a client’s preferred accounting method when they anticipate little fallout from this decision, they believe they can easily justify the method, and they perceive that colleagues, shareholders and creditors would also agree with the decision. Practical implications Results benefit auditing standard setters and regulators and are relevant for accounting institutes and audit firms because practitioners can learn about circumstances under which auditors subordinate their judgment. Originality/value This study contributes to the audit literature by using the TPB to identify factors associated with auditors’ judgment subordination. In addition, it applies the TPB in a context where a client-preferred accounting method is considered acceptable but is not the most appropriate in light of the audited entity’s specific circumstances.

scholarly journals Assessing Management Integrity: Insights from Big 4 Auditors in Egypt

2018 ◽  
Vol 12 (1) ◽  
pp. A29-A39
Author(s):  
Rasha Kassem
Keyword(s):  
Best Practices ◽  
Training Programs ◽  
Risk Assessments ◽  
External Auditors ◽  
Corporate Scandals ◽  
Fraud Risk ◽  
Big 4 ◽  
Audit Firms ◽  
Fraud Risk Assessments ◽  
Audit Standards

SUMMARY Recent corporate scandals have raised concerns about the quality and value of the audit profession and have generated demands for improving auditors' evaluation of management integrity. The literature lacks evidence regarding methods of assessing management integrity, while audit standards provide little if any guidance on this matter. This raises questions about how external auditors can comply with the audit standards in this area and what best practices and deficiencies exist in the assessment of management integrity. This study examines methods of assessing management integrity by providing insights from the Big 4 auditors in Egypt. The findings of this study will benefit audit firms in their professional audit training programs, as well as auditors conducting fraud risk assessments.

Theorising the impact of COVID-19 on the fraud victimisation of older persons

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cassandra Cross
Keyword(s):  
Social Isolation ◽  
Older Persons ◽  
Design Methodology ◽  
Empirical Work ◽  
Well Being ◽  
Current Response ◽  
Content Type ◽  
Fraud Risk ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to understand how COVID-19 may alter the vulnerability levels of older persons, and how this may change their potential for fraud victimisation. This is particularly focused on the government’s use of isolation, restrictions on activity and physical distancing to combat the virus. Design/methodology/approach In the absence of statistics, this paper examines what is currently known about older persons and fraud, as well as the recent knowledge of COVID-19-related fraud. On this basis, the paper hypothesises the conceivable changes to vulnerability that potentially expose older persons to fraud. Findings This paper argues that COVID-19 has not seen “new” fraudulent approaches, rather offenders have used COVID-19 as a context to their existing schemes. Further, the current response to COVID-19 can substantially increase the number of older persons experiencing levels of vulnerability, and therefore increase their fraud risk. Research limitations/implications The current paper applies existing knowledge into the current circumstances of COVID-19 and lays the foundations for empirical work to be conducted in this area. Practical implications This paper provides an impetus to target the well-being and connectivity of older persons, (regardless of the COVID-19 context), to reduce their vulnerability to fraud victimisation. Social implications This paper highlights the importance of connectivity for older persons, and the need to focus on overcoming social isolation and loneliness. Originality/value This paper is the first to hypothesise the effects of COVID-19 and its associated government responses to the overall vulnerability of older persons, with a focus on the potential for fraud victimisation.

The effect of changing fiscal year-ends on audit fees and audit quality

2019 ◽  
Vol 12 (3) ◽  
pp. 365-382
Author(s):  
Angel Arturo Pacheco Paredes ◽  
Clark Wheatley
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Audit Fees ◽  
Policy Implications ◽  
Fiscal Year ◽  
Content Type ◽  
Audit Firms ◽  
Negative Effect ◽  
Practical Implications

Purpose This study aims to extend recent research analyzing the effect of auditor busyness on audit quality. Specifically, this study explores the effect on audit quality of a change of fiscal year-end to or from an audit firm’s busy period. Design/methodology/approach Empirical archival. Findings When firms change their fiscal year-end to a period when the auditor is less busy, client firms are rewarded with lower audit fees and auditors are rewarded with a reduction in required effort. This study finds no difference in the level of audit quality after a change in fiscal year-end. Practical implications There are significant implications for audit firms as they may gain cost advantages by successfully promoting off-season fiscal year-ends, and reduce the negative effect on employees associated with “busy season” stress. Similarly, client firms may find that audit costs are reduced when they adopt a less “busy” fiscal year-end. Social implications These results have policy implications for regulators because regulators often dictate the fiscal year-end for certain industries or traded securities. Such dictates may thus introduce inefficiencies into the market for audit services. Originality/value These results should guide regulators in their decisions to dictate fiscal year-ends and firms in their choice of reporting periods.

Awareness and use of self-archiving options among academic librarians in Nigerian universities

2019 ◽  
Vol 68 (1/2) ◽  
pp. 2-16 ◽  
Author(s):  
Clement Chukwuma Okeji ◽  
Monica Eberechukwu Eze ◽  
Nneka Maureen Chibueze
Keyword(s):  
Design Methodology ◽  
Online Survey ◽  
Academic Research ◽  
Academic Librarians ◽  
Use Of Self ◽  
Online Questionnaire ◽  
Research Papers ◽  
Content Type ◽  
Scholarly Output ◽  
Practical Implications

Purpose The purpose of this study was to investigate the extent to which academic librarians in Nigerian universities use self-archiving options to make their research papers visible globally. Design/methodology/approach An online survey was designed using SurveyMonkey software to collect data from 394 academic librarians in Nigerian Universities. Findings The study revealed that the academic librarians in Nigerian universities know and actually use self-archiving options such as ResearchGate, institutional repository and Academia.edu to self-archive their publications. While other promotional tools such as kudos, Mendeley.com and personal websites/servers are not popularly used by the academic librarians. Increased exposure of previously published work, broadens the dissemination of academic research generally, and increases institutions’ visibility were among the factors the academic librarians indicated as very important that motivate them to contribute their scholarly output to self-archiving options. Research limitations/implications One major challenge to the study is that many academic librarians in Nigeria do not check their e-mails regularly to enable them to respond to a request to participate in an online survey; some of them do not have stable internet facilities, whereas others are reluctant to respond to an online questionnaire. These reasons led to a low response rate which makes it difficult to generalize findings. Practical implications Findings from the study will create awareness for academic librarians in developing countries to see the need to self-archive their pre-print and accepted version of their papers in different self-archiving platforms. Originality/value Self-archiving of papers by authors will lead to an increased visibility of the author and possible citation of the work and chances of collaboration with international colleagues for research projects.

Women wine consumers: information search and retailing implications

2007 ◽  
Vol 19 (4) ◽  
pp. 327-339 ◽  
Author(s):  
Thomas Atkin ◽  
Linda Nowak ◽  
Rosanna Garcia
Keyword(s):  
Information Search ◽  
Financial Risk ◽  
Design Methodology ◽  
Purchase Decisions ◽  
Online Questionnaire ◽  
Content Type ◽  
The Usa ◽  
Purchase Situation ◽  
Communication Methods ◽  
Practical Implications

PurposeThe purpose of this research is to examine gender differences in information search procedures and selection criteria relative to purchase situation and social and financial risk aversion.Design/methodology/approachAn online questionnaire was completed by 497 males and 877 females in the USA. A total of 88 percent of the respondents stated that they drank wine at least once per week. Participants were obtained by sending e‐mails to customer lists provided by wine‐related organizations.FindingsFindings suggest that, if a consumer is unsure about making a wine selection, women are more apt than men to seek information from store personnel, a server, sommelier, or winery personnel. Labels and shelf tags are also significantly more important for women. While winery region is very important to both men and women, women rely on medals and awards more than men.Research limitations/implicationsConsumers who are not necessarily comfortable with using the internet would not have had an opportunity to participate in this study.Practical implicationsThe differences by gender in the importance of and the usage of various information sources could help retailers prioritize their communication methods in US stores. Store personnel, servers, sommeliers, and winery personnel should be well‐prepared to answer questions and make recommendations.Originality/valueWomen buy 80 percent of the wine sold in the USA. This study helps retailers understand their preferences and how to assist them more effectively in their purchase decisions.

Economic growth in the Malaysian vegetarian market potential: internalized dimension of motivation

2020 ◽  
Vol 47 (9) ◽  
pp. 1181-1202
Author(s):  
Darshana Darmalinggam ◽  
Maniam Kaliannan
Keyword(s):  
Economic Growth ◽  
Design Methodology ◽  
Theory Of Planned Behaviour ◽  
Vegetarian Diet ◽  
Market Potential ◽  
Online Questionnaire ◽  
Content Type ◽  
Beta Coefficient ◽  
Start Ups ◽  
Practical Implications

PurposeThe purpose of this study is to explore the internalized dimension of motivation under the Unified Model of Vegetarian Identity (UMVI) model, namely, personal and prosocial motivators, for vegetarianism that spurs economic growth in the Malaysian vegetarian market potential.Design/methodology/approachSemi-structured online questionnaire was adopted as the primary methodology from which a total of 163 respondents were obtained.FindingsBoth, personal and prosocial motivators do positively relate to the economic growth of the Malaysian vegetarian market potential. However, prosocial motivators has a greater impact with a beta coefficient of 0.374 compared to 0.273 for personal motivators.Research limitations/implicationsProbable inaccurate representation of the entire vegetarian population in Malaysia. Time and resources available.Practical implicationsPractically, the Malaysian vegetarian society and Malaysian government bodies benefit from the study in ensuing promotion of environmental awareness in line with a vegetarian diet.Originality/valueLack of literature resources on vegetarianism in Malaysia led to the study contributing to an expansion of literature on the matter. This pioneer study benchmarks global literatures on motivators of vegetarianism and their impact on economy against the scarce literatures available in the Malaysian context. It contributes to the Malaysian economy and potential vegetarian restaurant start-ups wishing to enter the Malaysian vegetarian market. Theoretically, the theory of planned behaviour, utilitarian function and the UMVI were jointly utilised in explaining the motivators capturing Malaysian vegetarians' intention towards demand for vegetarian food.

Disclosure effects of the PCAOB part II reports

2017 ◽  
Vol 13 (4) ◽  
pp. 568-580
Author(s):  
Ifeoma Udeh
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Financial Statements ◽  
First Year ◽  
Dominant Focus ◽  
Content Type ◽  
Investor Confidence ◽  
Related Literature ◽  
Audit Firms ◽  
Practical Implications

Purpose The purpose of this paper is to examine the effect of the PCAOB part II report disclosures on US triennially inspected audit firms’ deregistration decisions, the likelihood and the timing of audit firms’ dismissals and resignations. Design/methodology/approach The paper anchored on US regulations used 158 publicly available records of disclosed PCAOB part II reports from 2004 to 2012. Findings The number of the quality control deficiencies disclosed in the part II report affects US triennially inspected audit firms’ decisions to deregister from the PCAOB. Additionally, audit firms’ dismissals and resignations, both occur mostly within the first year after the part II report disclosure, although audit firms that subsequently deregister are more likely to be dismissed. Practical implications The paper provides support that the disclosure of the PCAOB part II inspection report motivates audit quality improvement. Social implications The PCAOB inspection and subsequent disclosure of the part II inspection report enhances audit quality, which in turn, enhances investor confidence in the accuracy and reliability of audited financial statements. Originality/value The paper provides insights about the effect of the disclosures of PCAOB part II report, over and above any benefits from the PCAOB part I report disclosures, which is the dominant focus of related literature.

Spotting golden nuggets of innovation-ready human capital

2019 ◽  
Vol 35 (8) ◽  
pp. 17-18
Keyword(s):  
Human Capital ◽  
Board Of Directors ◽  
Design Methodology ◽  
Reading Time ◽  
Board Members ◽  
Content Type ◽  
The Board Of Directors ◽  
Pertinent Information ◽  
The Impact ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper concentrates on the impact that different forms of human capital have on the board of directors’ strategic activity and vision for their enterprise. The results reveal that innovation can be fueled most reliably by retaining the company founder on the board of directors and by seeking and retaining for the longer term board members with scientific and technological expertise. Originality/value The briefing saves busy executives, strategists, and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

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