Individual Auditors’ Identification of Relevant Fraud Schemes
Posted: 10 Aug 2011 Last revised: 20 May 2015
Date Written: August 10, 2011
In this study, I experimentally investigate whether focusing on management's goals helps individual auditors identify ways management may be committing fraud (i.e., fraud schemes). I also examine whether forming independent expectations for a client's reported results enhances the benefits of focusing on management's goals. I find that auditors who are prompted to link relevant information to client management's goals identify more relevant fraud schemes than auditors who are not prompted to perform this process. However, I do not find that forming independent expectations for the client's reported results enhances the benefit of focusing on management's goals. In subsequent analysis, I also find that auditors who identify a higher number of relevant fraud schemes identify more audit procedures that target the case fraud.
Keywords: fraud schemes, management’s goals
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