Using Game Theory and Strategic Reasoning Concepts to Prevent and Detect Fraud

Posted: 28 Jul 2004

See all articles by T. Jeffrey Wilks

T. Jeffrey Wilks

Brigham Young University

Mark F. Zimbelman

Brigham Young University

Abstract

This commentary examines academic research for insights regarding the detection and prevention of fraudulent financial reporting. We review theoretical and empirical research from game theory, social psychology, judgment and decision making, and auditing to identify improvements in audit practice and promising areas for future research. This review focuses on the strategic fraud setting and suggests modifications in auditing standards that should facilitate auditors' use of strategic reasoning in this setting. We emphasize three critical audit tasks - fraud risk assessment, audit planning, and audit plan implementation - and recommend changes to current auditing standards and identify potential research questions for each task.

Keywords: Audit judgment, audit planning, fraud, game theory, risk assessment, strategic reasoning

JEL Classification: M41, M49

Suggested Citation

Wilks, Thomas Jeffrey and Zimbelman, Mark F., Using Game Theory and Strategic Reasoning Concepts to Prevent and Detect Fraud. Accounting Horizons, Vol. 18, No. 3, September 2004. Available at SSRN: https://ssrn.com/abstract=554321

Thomas Jeffrey Wilks (Contact Author)

Brigham Young University ( email )

School of Accountancy
526 Tanner Building
Provo, UT 84602 84602
United States
801-422-3930 (Phone)
801-422-0621 (Fax)

HOME PAGE: http://marriottschool.byu.edu/directory/details?id=5337

Mark F. Zimbelman

Brigham Young University ( email )

Marriott School of Management 540 N Eldon Tanner Building
Provo, UT 84602
United States
801-422-1227 (Phone)

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