Use of Regression Models when Performing Fraud Risk Assessment Procedures in the Audit Process

SUMMARY Internationally operating audit firms rely heavily on global firm policies and audit methodologies to ensure consistency of audits across the globe. However, cultural differences are likely to affect auditors' compliance with such firm-wide systems of control. In this study we use proprietary data from a Big 4's internal quality reviews, involving 1,152 audit engagements from 29 countries, to assess the impact of cross-national cultural differences on auditors' compliance (or not) with the firm's policy in a specific yet crucial and culturally susceptible area of the audit process: fraud risk assessment procedures. We find that collectivism and societal trust are negatively associated, while religiosity is positively associated with compliance with global firm policy. However, we do not find evidence that compliance and power distance are associated. Overall, our findings suggest that cross-national differences in auditors' compliance with global audit firm methodology (or not) are associated with cross-national cultural differences. An implication of our findings is that a uniform local application of global audit methodologies may remain an illusion unless different, targeted approaches for different regions in the world are considered.

Download Full-text

Implementation of Fraud Risk Assessment To Mitigate The Fraud Risk in Tax Audit Process

AFEBI Accounting Review ◽

10.47312/aar.v4i02.181 ◽

2020 ◽

Vol 4 (02) ◽

pp. 77

Author(s):

Qomarudin Alfatah ◽

Nicholas Agustinus L. Tobing

Keyword(s):

Risk Assessment ◽

Rational Choice Theory ◽

Choice Theory ◽

Audit Process ◽

Fraud Risk ◽

Quantitative And Qualitative Research ◽

Risk Appetite ◽

Directorate General ◽

Tax Audit ◽

High Level

The emergence of a variety of fraud schemes, ineffective internal controls, and the number of fraud cases that occur in the taxation sector, encourage researches related to fraud risk assessment, especially in tax audit activities. This study aimed to identify potential fraud schemes risks, evaluate risk controls and discuss anti-fraud strategies using a case study at the Directorate General of Taxes in Indonesia. With a sequential mix method approach through a combination of quantitative and qualitative research, and by using rational choice theory, this research extends the literature of previous studies by providing evidence that fraud can be prevented by increasing the probability to detect fraud scheme. This study fills out the gaps related to fraud risk assessment research in the tax audit process which have been rarely performed in the literatures.The results concluded that of the 20 fraud scenarios identified, there were 7 fraud scenarios categorized as high level of residual fraud risk, 9 fraud scenarios at the medium level, and the rest at low levels. This study discussed appropriate controls to mitigate the residual fraud risk to be maintained at the level of organizational risk appetite. In addition, this study also discussed anti fraud strategies that are relevant to the organization, through evaluating anti-fraud strategies that have been previously implemented and anti-fraud strategies that have never been implemented

Download Full-text

Investigating Fraud Risks Assessment Practices in Public Sector Audits

Asia-Pacific Management Accounting Journal ◽

10.24191/apmaj.v16i1-08 ◽

2021 ◽

Vol 16 (1) ◽

pp. 183-205

Author(s):

Mohamad Mahsun ◽

◽

Nafsiah Mohamed ◽

Sharifah Norzehan Syed Yusuf ◽

Indrawati Yuhertiana ◽

...

Keyword(s):

Risk Assessment ◽

Public Sector ◽

Audit Process ◽

Planning Stage ◽

Audit Planning ◽

Fraud Risk ◽

Auditing Standards ◽

The Government ◽

The Impact ◽

Audit Standards

Fraud Risk Assessment (FRA) is claimed to be an important activity at the audit planning stage in both the private and public sectors. In fact, because of the importance of FRA activities, Auditing Standards (SAS 99, ISA 240, ISSAI 1240) have required auditors to carry out FRAs at the audit planning stage. FRA is considered as the core activity of financial audit planning because of the impact of fraud on the sustainability of an entity, quality of life, and economic growth. This study aimed to determine the practice of FRA in public sector audits and to find out more about the obstacles faced by auditors during the audit process and to find out the causes of these obstacles by considering the approach to the Audit Standards used. This study found that auditors’ performance can be determined based on their complete compliance with audit standards. We have encountered a serious problem that requires firm action from the government or a competent official, namely the auditor’s willingness in preparing the Fraud Risk Assessment Matrix. In addition, we recommend the Audit Standards Board to adopt international public sector auditing standards and disseminate them through training for auditors, students, and professionals. Keywords: fraud risk assessment, public sector audit, auditor competency

Download Full-text

FRAUD RISK ASSESSMENT: EXPERIMENTAL STUDY ON THE ALTERNATIVE FRAUD MODEL AND AUDITOR RISK PREFERENCES

Jurnal Reviu Akuntansi dan Keuangan ◽

10.22219/jrak.v10i1.11430 ◽

2020 ◽

Vol 10 (1) ◽

Author(s):

Arintyas Kristi Artati ◽

Suzy Noviyanti

Keyword(s):

Risk Assessment ◽

Experimental Study ◽

High Risk ◽

Risk Preferences ◽

Risk Preference ◽

Low Risk ◽

Audit Process ◽

Fraud Risk ◽

Central Java ◽

Public Accountant

Fraud risk assessment is an important part of the audit process and one of the toughest challenges faced by auditors. In considering fraud risk assessment, fraud models and risk preferences can influence auditor’s decisions. This study uses a 2x2 between-subject experimental design with a total of 110 auditors of public accountant firms in Central Java as participants and produces 60 data ready for processing. Participants were formed into 4 groups with different treatments which the treatments consist of Diamond Fraud model with high and low risk preferences and Pentagon Fraud model with high and low risk preferences. The results show that the use of Pentagon Fraud model will result a more conservative fraud risk assessment. When auditors dare to take high risk action, the resulting fraud risk assessment will be low. In addition, the fraud model and risk preference variables show a significant influence on the performing of fraud risk assessment. There is an interaction between fraud models and auditors’ risk preferences in the performance of fraud risk assessment.

Download Full-text

Absolute mortality risk assessment of COVID-19 patients: the Khorshid COVID Cohort (KCC) study

BMC Medical Research Methodology ◽

10.1186/s12874-021-01340-8 ◽

2021 ◽

Vol 21 (1) ◽

Author(s):

Hamid Reza Marateb ◽

Maja von Cube ◽

Ramin Sami ◽

Shaghayegh Haghjooy Javanmard ◽

Marjan Mansourian ◽

...

Keyword(s):

Risk Assessment ◽

Hospital Admission ◽

Mortality Risk ◽

Regression Models ◽

Assessment Method ◽

Point Of View ◽

Statistical Point ◽

Hazard Regression ◽

Risk Assessment Method ◽

Discharge From Hospital

Abstract Background Already at hospital admission, clinicians require simple tools to identify hospitalized COVID-19 patients at high risk of mortality. Such tools can significantly improve resource allocation and patient management within hospitals. From the statistical point of view, extended time-to-event models are required to account for competing risks (discharge from hospital) and censoring so that active cases can also contribute to the analysis. Methods We used the hospital-based open Khorshid COVID Cohort (KCC) study with 630 COVID-19 patients from Isfahan, Iran. Competing risk methods are used to develop a death risk chart based on the following variables, which can simply be measured at hospital admission: sex, age, hypertension, oxygen saturation, and Charlson Comorbidity Index. The area under the receiver operator curve was used to assess accuracy concerning discrimination between patients discharged alive and dead. Results Cause-specific hazard regression models show that these baseline variables are associated with both death, and discharge hazards. The risk chart reflects the combined results of the two cause-specific hazard regression models. The proposed risk assessment method had a very good accuracy (AUC = 0.872 [CI 95%: 0.835–0.910]). Conclusions This study aims to improve and validate a personalized mortality risk calculator based on hospitalized COVID-19 patients. The risk assessment of patient mortality provides physicians with additional guidance for making tough decisions.

Download Full-text

Multivariate linear regression models for predicting metal content and sources in leafy vegetables and human health risk assessment in metal mining areas of Southern Jharkhand, India

Environmental Science and Pollution Research ◽

10.1007/s11356-021-12494-9 ◽

2021 ◽

Author(s):

Soma Giri ◽

Mukesh Kumar Mahato ◽

Abhay Kumar Singh

Keyword(s):

Risk Assessment ◽

Linear Regression ◽

Health Risk ◽

Regression Models ◽

Metal Content ◽

Human Health Risk ◽

Leafy Vegetables ◽

Linear Regression Models ◽

Metal Mining ◽

Mining Areas

Download Full-text

An Approach to Sustainability Risk Assessment in Industrial Assets

Sustainability ◽

10.3390/su13126538 ◽

2021 ◽

Vol 13 (12) ◽

pp. 6538

Author(s):

Fco. Javier García-Gómez ◽

Víctor Fco. Rosales-Prieto ◽

Alberto Sánchez-Lite ◽

José Luis Fuentes-Bargues ◽

Cristina González-Gaya

Keyword(s):

Risk Assessment ◽

Risk Management ◽

Asset Management ◽

Analysis And Evaluation ◽

The People ◽

Preliminary Study ◽

Assessment Procedures ◽

Identification Analysis ◽

A Company ◽

Industrial Company

Asset management, as a global process through which value is added to a company, is a managerial model that involves major changes in strategies, technologies, and resources; risk management; and a change in the attitude of the people involved. The growing commitment of companies to sustainability results in them applying this approach to all their activities. For this reason, it is relevant to develop sustainability risk assessment procedures in industrial assets. This paper presents a methodological framework for the inclusion of sustainability aspects in the risk management of industrial assets. This approach presents a procedure to provide general criteria, methodology, and essential mandatory requirements to be adopted for the identification, analysis, and evaluation of sustainability aspects, impacts, and risks related to assets owned and managed by an industrial company. The proposed procedure is based on ISO 55,000 and ISO 31,000 standards and was developed following three steps: a preliminary study, identification of sustainability aspects and sustainability risks/opportunities, and impact assessment and residual risks management. Our results could serve as a model that facilitates the improvement of sustainability analysis risks in industrial assets and could be used as a basis for future developments in the application of the standards to optimize management of these assets.

Download Full-text