Impact of the Fraud Triangle on Audit Process: The Nigerian Accountant's View
University Advanced Research Journal, No. 1, p. 130, 2009
18 Pages Posted: 19 Mar 2011
Date Written: 2009
The concept of "Fraud Triangle" is introduced to the accounting professional literature in the Statement of Auditing Standard (SAS) No 82 termed "Consideration of Fraud in a Financial Statement Audit" The Fraud triangle embodies the three conditions generally present when fraud occurs, incentive/pressure, Opportunity and Attitude !Rationalization. The objective of this research is to investigate more complex relationships between the main factors that affect fraud and audit risk. Input from forensic experts, academics and others consistently show that evaluation of information about fraud is enhanced when auditors evaluate in the context of these three conditions. To examine the impact of the fraud triangle on the audit process, three hypotheses were formulated and the data generated from questionnaire were tabulated and analyzed using percentage analysis, frequency table and mean score. The hypotheses were finally tested using z-test statistic and also Baseline model (SAS No 47) and Baseline Model with fraud Risk Assessment (SAS No 82) were equally used for this analysis. The results of the analysis support tile concept of the fraud triangle in that tile three components and the relationships between these components arc shown to have a substantial impact on audit risk. It was founded that audit risk decrease as tile evidence for management integrity increase. The study also reveal that without performing appropriate modify audit procedure and obtaining evidence supporting no fraud audit risk will never be reduces to acceptable level The researcher recommends that a "forensic type field work" be introduces into audits. It is also recommended that auditors should appropriately modify audit procedures and obtain evidence supporting no fraud for this will help to reduce audit risk to beef up their internal control to monitor the red flags of fraud.
Keywords: fraud, audit, accounting
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