Audit sampling strategies and frauds: an evidence from Africa

Purpose This paper aims to investigate how professionals such as accountants, auditors, senior civil servants and academics perceive the use of audit sampling strategies adopted by professionals to increase detection rates of frauds and corruption within the public sector in Africa. It also examines the respondents’ perceived values regarding the reasons for committing frauds, types of fraud and corruption, as well as the aspects of audit sampling strategies to tackle frauds. Design/methodology/approach This research uses non-parametric statistics and logistic regression to analyse the respondents’ opinions regarding the state of frauds and corruption in Africa (particularly in Tunisia and non-Tunisia countries), the common factors behind people committing frauds, including the types of frauds and corruption and the respondents’ opinions on the use of audit sampling strategies (non-random and random) to examine the instances of frauds and corruption. Findings The findings indicate that most respondents prefer to use non-probabilistic audit sampling rather than more robust sampling strategies such as random sampling and systematic random sampling to detect frauds and corruption. In addition, although there are some minor statistical differences between the countries in terms of the respondents’ perceived values on skimming fraud and on the use of audit random sampling to tackle rampant corruption in Africa, the overall findings indicate that opinions do not significantly differ between the respondents from Tunisia and other countries in terms of the types of fraud, the reasons for committing fraud and the auditing sampling strategies used to investigate the frauds. Research limitations/implications This research serves as an analytical exploratory study to instigate further audit sampling research to combat rampant fraud and corruption in the public sector in Africa. Originality/value There are few or non-existent studies investigating the application of audit sampling strategies in Africa countries, particularly to examine the application of audit random sampling and audit non-random sampling strategies to detect fraudulent activities and corruption. Correspondingly, this research carries strategic implications for accountants and auditors to successfully detect fraudulent activities and corruption in Africa.

Legal regulation of obtaining audit evidence in the system of international audit standards in force in the Russian Federation

This article analyzes the procedure for obtaining audit evidence, the regulation of which is contained in international auditing standards. The key role in the system of international standards governing the receipt of audit evidence is played by ISA 200, ISA 500, recognized and operating in the current period in the Russian Federation. Taking into account the analysis of these ISAs and the directly related international audit standards, the concept and types of audit evidence are determined, their essential characteristics, audit procedures aimed at obtaining audit evidence, disclose methods for selecting test items in order to obtain audit evidence, including the audit sampling method, which allows for a conclusion on the entire set of elements to be drawn. In addition, the procedure for obtaining audit evidence in relation to certain items of the financial statements is determined.

Can Substantive Analytical Procedures with Data and Data Analytics Replace Sampling as Tests of Details?

To avoid problems caused by moderate or weak substantive analytical procedures (SAPs), audit firms tend to focus more on tests of details than SAPs, especially for large income statement accounts such as revenues. Based on findings from previous studies, this commentary study attempts to: 1) summarize the outcomes of SAPs developed by advanced analytics models (e.g., regression and time series models), and 2) respond to the question of SAP use by evaluating the limitations and benefits if one test replaces the other. The outcomes of prior studies generally show that SAPs developed by advanced analytical models do not provide a high level of assurance for revenue. Since SAPs and audit sampling present different risks and unique benefits, they are often complementary. Without the careful consideration of conditions related to the risks and benefits of each test, simply avoiding SAPs could reduce the effectiveness of substantive tests.

Planning and conducting internal audit in practice in the private sector

During the data collection process to understand and assess risk, internal auditors gain significant insight into operations and opportunities for improvement that can be extremely beneficial to the organization. This paper presents valuable insights into practical work that will assist internal auditors in the process of planning and conducting internal audit in the private sector. In the process of internal audit, it primarily starts from planning through the creation of an audit universe that includes a list of all potential audits based on risk and exposure assessment. The chief audit executive develops an annual action plan based on the audit universe. The annual plan should be broken down into four quarters and each defined audit should be arbitrarily assigned to one quarter. The beginning of the process of the planned audit begins with preparatory activities that include defining the objectives of the individual audit, preparation of a detailed schedule of the individual audit, conducting a preliminary survey. What follows is that audit sampling techniques (defined as the application of audit procedures to less than 100% of items within a class of transactions or account balance so that each sample unit has a chance to be selected) perform sample selection from the population. According to the selected model, the audit is approached on the basis of which the opinion of the internal auditor is issued in the created engagement report.

Assessment problems of the financial condition of enterprises according to the results of the audit

The relevance of the article lies in the importance of conducting an audit in assessing the financial condition of industrial enterprises as a basis for effective internal control and effective operation and development of the enterprise. The main purpose of the study is to determine the conceptual basis of the organization and conducting an audit to assess the financial condition of the enterprise, identify the main problems of assessing the financial condition of enterprises based on the results of the audit, and develop the ways to overcome them. The paper emphasizes the importance of audit as one of the methods of internal control, which ensures the prevention of abuse and timely response to identified deficiencies in order to prevent them in the future, thus ensuring a high level of the financial condition of the enterprise. The main tasks of organizing and conducting an audit at the enterprise are determined. The general stages of the audit of the financial condition of the enterprise are outlined, including the preparation and planning of the audit, audit sampling and audit procedures, evaluation of the results of audit procedures, and preparing the auditor’s report and opinion. The main shortcomings of industrial enterprises, which lead to a violation of their financial condition, are studied. According to the results of the research, the main problems, causes, and ways to overcome the negative trends identified by the results of the audit of financial statements of industrial enterprises are determined. The paper emphasizes the importance of conducting an independent audit of the financial condition, which allows managers to ensure the veracity of information about the financial condition; analyzing the indicators of financial condition and ways to improve them; exercising control over the correctness of accounting and compliance with financial reporting indicators; avoiding falsification of financial statements and fraud by employees; establishing compliance of the enterprise’s activity and accounting with the current legislation.