Auditors’ Perceptions of the Effectiveness of Fraud Prevention and Detection Methods

Abstract

Fraud has emerged as an undesirable offshoot of human greed and pressure to perform in growing corporate world. It has led to erosion of stakeholders' confidence across the globe. Now, they see the annual reports and other corporate filings with scepticism. Despite increasing instances of fraud, the anti-fraud mechanism of the business organisations is not up-to-date. The present study aims to examine the effectiveness of fraud detection and prevention methods used by corporate sector. A survey of 336 auditors seeking their perception about effectiveness of various anti-fraud methods has been conducted. The findings reveal that corporate governance is the most effective tool against fraud. Use of information technology, timely audit, regular inspection and corporate policies and procedures, also, play a vital role in curbing fraudulent practices in an organisation. Thus, the findings suggest that expenditure on effective anti-fraud methods should not be viewed as an expense; instead, it must be considered as an investment as it saves from the potential losses due to fraud and damage to business stability, revenue and image.

The Role of Good Village Governance Implementation Towards Reducing Fraud Potential and Ensuring Effective Government Performance

“…These findings are not in line with the report of previous studies that government can prevent fraud (Chen et al, 2006;Mangala & Kumari, 2017;Eferakeya et al, 2016;Halbouni et al, 2016;Matoussi & Gharbi, 2011;Tan et al, 2017). It is, however, believed the implementation of GCG is a solution to reduce fraud in village funds since the management process involves social interaction between several stakeholders such as central, regional and village governments as well as the community.…”

“…Several studies have associated the high misappropriation of village funds to the lack of supervision from the community (Mangala & Kumari, 2017;Wibisono, 2017). As earlier stated, effective understanding and supervision have a positive impact on the improvement of financial accountability (Widarnawati et al, 2018).…”

“…Several works of research have also established a strong relationship between corporate governance and the occurrence of fraud (Kadir et al, 2017;Chen, Firth, Gao, & Rui, 2006;Mangala & Kumari, 2017;Eferakeya, Enaibre, & Offor, 2016). Activities of fraud were found to be dominant in companies with poor management systems (Dunn, 2004;Farber, 2005;Rezaee & Tuo, 2017).…”

Fraud prevention and detection practices in the perspective of Jember Regency internal auditor

“…This means that the auditor's performance will be maximized if supported by good ability and expertise, the perception of the suitability of roles and high motivation. The expertise possessed by the auditor will increase the auditor's ability to detect fraud (Mangala & Kumari, 2017). By having adequate competence, internal auditors can detect quickly and accurately regarding fraud (Drogalas, Karagiorgos, & Arampatzis, 2015;Petraşcu & Tieanu, 2014;Widiyastuti & Pamudji, 2009).…”

Fraud Detection Gap between Auditor and Fraud Detection Models: Evidence from Gulf Cooperation Council

“…Aligned with the International Standard on Auditing (ISA) 240, auditors are responsible to detect any misstatements resulting from fraudulent activity, error and/ or non-compliance in the financial statement by performing the audit work. While detecting fraud is difficult as the fraudster may cover up the fraud with complete documentations, external auditors may rely on fraud detection models 1 in order to help in identifying cases that require further investigation (Mangala & Kumari 2017;Chan & Vasarhelyi 2018). Evidently, there has been very limited research aimed at identifying the fraud detection models to the real external auditors' opinion especially in GCC region.…”