Digging deep into culture and behaviour to tackle fraud
Focusing on culture and behaviour may help auditors to identify fraudulent financial reporting says, Michelle Cardwell.
Debate on the future of audit has focused on a number of themes including what, if anything, auditors can do to detect and prevent fraud. In his review into the scope of audit in the UK, Sir Donald Brydon proposes that auditors do more on fraud, including training in fraud awareness and forensic accounting. These recommendations raise a host of issues, as fraudulent financial reporting is complex and its detection can be very difficult.
Auditors have a duty to look for material errors in the financial statements, including material errors caused by fraud, whether from theft of assets or intentional under or overstatements of financial statements. Identifying fraudulent financial reporting however, presents unique challenges to the auditor.
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