Auditor Responsibility and Fraud Detection: In Ethiopian Private Audit Firms

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Addis Ababa University


This study examines the roles and responsibilities of external auditors in fraud detection in Ethiopia including the factors that influence external auditors' responsibility and expert performance in detecting fraud. The study adopts a mixed methods research approach by combining data gathering instruments of research questions, in-depth interviews and document analysis. The questionnaire data were analyzed using descriptive statistics, correlations, and logistic regression analysis and data from interview and document reviews 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. Reporting intentions of an auditor to the concerned body depends upon the type of fraudulent act basically if it is investigative audit than financial statement audit. Fraud, in general, was not perceived to be a major problem in Ethiopian. 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 well-organized professional body in Ethiopia are listed among the most important challenges of auditors fail to detect fraud. The study also finds that the five variables which are certification, practical experience, training, audit fee, and independence significantly influence the auditor’s expert performance to fraud detection. The study suggests that Auditors need to “audit smarter which can be accomplished by the need for auditors to be more aware in context which the audit occurs and the fact that the nature and concentration of fraud varies by industry and auditors should be aware of the development of their profession



In ethiopian private audit firms