Assessment of the Role of Audit Firms in Reducing Fraud
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Date
2017-06
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Addis Ababa Universit
Abstract
This study examines the roles of external auditors in fraud reduction in Ethiopia including the factors
that influence external auditors' responsibility and expert performance in detecting fraud. The study
adopts questionnaire data and depth interviews research approach by combining data gathering
instruments of research questions,
The questionnaire data were analyzed using descriptive statistics, and correlations, and data from
interview were interpreted qualitatively. The findings of the study show that, auditors are
responsible for detection and uncovering fraud, and are legally liable for subsequently discovered
misstatement in audited financial statements
The results of the research result indicate that most of the private audit firms do not comply with
professional ethics and lack independence from their client. This non-compliance came from
self-interest, self-review and familiarity threats which results from having family, financial and
personal relationship with their clients.
Unwillingness to look for fraud because of fear of spoiling good relationship with clients, too much
trust placed on the auditees, management and employees, auditor not giving enough emphasis to
audit quality, management not having fraud policy; and, failure to focus on high-risk fraud areas.
Fraudsters collusion, Absence of clear interpretation of tax law /proclamation, absence of wellorganized
professional body in Ethiopia are listed among the most important challenges of auditors
fail to detect fraud. The study also finds that the six variables which are, professional ethics,
certification, practical experience, training, audit fee, and independence significantly influence the
auditor’s expert performance to fraud detection
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Keywords
Reducing Fraud