Auditor Responsibility and Fraud Detection: In Ethiopian Private Audit Firms
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Date
2014-05
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Addis Ababa University
Abstract
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
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In ethiopian private audit firms