Fraud Auditing and Different Type of Fraud

2578 Words Apr 21st, 2012 11 Pages
Fraud Auditing and Different type of fraud
Introduction
Over the years, the role of auditors become increasingly important especially in a capitalist economy as the process of wealth creation and political stability depends heavily upon confidence in processes of accountability and how well the expected roles are being fulfilled. An auditor has the responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing. The most frequently debated areas amongst auditors, politicians, media, regulators and the public is where the fraud is coming from and by whom. This disagreement has been especially tinted by the collapse of big corporations like Enron and
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First, there is an incentive or pressure that provides a reason to commit fraud. Second, there is an opportunity for fraud to be perpetrated (e.g. absence of controls, ineffective controls, or the ability of management to override controls.) Third, the individuals committing the fraud possess an attitude that enables them to rationalize the fraud. (http://en.wikipedia.org/wiki/SAS_99)
As we know fraud is more likely to be committed by a single individual, without a prior history of fraud, who often raises a red flag because they are living beyond their means and are experiencing financial difficulties. The reasons for fraud are not always obvious to the business owner or even their attorneys. However, what is obvious is that it is often overlooked, ignored, and even undetected.
An Analysis of the Fraud Triangle Abstract

The concept of a “Fraud Triangle” is introduced to the professional literature in SAS No. 99, Consideration of Fraud in a Financial Statement Audit. The Fraud Triangle consists of three conditions generally present when fraud occurs: Incentive/Pressure, Opportunity, and Attitude/ Rationalizations. Input from forensic experts, academics and others consistently show that evaluation of information about fraud is enhanced when auditors evaluate in the context of these three conditions. To examine the impact of the fraud triangle on the audit process, this paper develops an evidential network that has two
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