Are Fraud Specialists Relatively More Effective than Auditors at Modifying Audit Programs in the Presence of Fraud Risk?

The Accounting Review. May 2015 (Forthcoming)

51 Pages Posted: 8 Jan 2008 Last revised: 6 Jan 2015

See all articles by J. Efrim Boritz

J. Efrim Boritz

University of Waterloo - School of Accounting and Finance

Natalia Kochetova

Saint Mary’s University - Sobey School of Business

Linda A. Robinson

University of Waterloo - School of Accounting and Finance

Date Written: August 14, 2014

Abstract

Previous studies indicate that auditors are able to identify fraud risk factors, but may not be able to translate this knowledge into an audit plan that effectively takes these factors into account to increase the likelihood of detecting fraud. Fraud specialists may be able to compensate for such limitations. This study investigates the relative merits of involving fraud specialists in assisting auditors by developing an audit plan that would effectively address fraud risk in a revenue cycle. Results show that fraud specialists did not differ from auditors in the number of procedures selected from a standard audit program; nor were these procedures cumulatively more effective than those selected by auditors. Fraud specialists generated a greater number of non-standard additional audit procedures, and those procedures were marginally more effective, but less efficient, than those of auditors, except for certain groups of procedures. Finally, although the fraud specialists proposed significantly more additional (non-standard) procedures than auditors, their proposed budget increase for this category of procedures was significantly smaller than the budget increase proposed by auditors. Adjustments to the overall time budget did not differ between fraud specialists and auditors.

Keywords: fraud, specialist, audit planning, audit procedures

JEL Classification: C90, M40

Suggested Citation

Boritz, Efrim and Kochetova, Natalia and Robinson, Linda A., Are Fraud Specialists Relatively More Effective than Auditors at Modifying Audit Programs in the Presence of Fraud Risk? (August 14, 2014). The Accounting Review. May 2015 (Forthcoming). Available at SSRN: https://ssrn.com/abstract=1081522 or http://dx.doi.org/10.2139/ssrn.1081522

Efrim Boritz

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada
519-888-4567 (Phone)
519-888-7562 (Fax)

Natalia Kochetova (Contact Author)

Saint Mary’s University - Sobey School of Business ( email )

SB 318, Dept. of Accounting
Sobey School of Business, Saint Mary's University
Halifax, Nova Scotia B3H 3C3
Canada
902-420-5800 (Phone)
902-420-5011 (Fax)

Linda A. Robinson

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada

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