M.H Abdolmohammadi and V.D Owhoso
Describes the objectives herein as examining auditors’ ethical sensitivity to assess risk of fraud in financial reporting. Gives background literature as the opening section, and…
Abstract
Describes the objectives herein as examining auditors’ ethical sensitivity to assess risk of fraud in financial reporting. Gives background literature as the opening section, and this is followed by a section in which the investigation method is described, study results are then discussed, followed by a summary and conclusions. Looks at case studies of bribery scandals, etc. and discusses ethics and auditing. Sums up that ethical scenarios examined herein, perhaps, contain external economies ‐ but not external diseconomies.
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H. Labuschagne and G. Els
The Prevention and Combating of Corrupt Activities Act, Act 12 of 2004, was instituted to curb corrupt activities. It imposes a duty on people in positions of authority to report…
Abstract
The Prevention and Combating of Corrupt Activities Act, Act 12 of 2004, was instituted to curb corrupt activities. It imposes a duty on people in positions of authority to report corrupt or suspected corrupt activities and related activities. However, auditors are not listed in this Act as persons in a position of authority. This article discusses whether, despite the fact that the Prevention and Combating of Corrupt Activities Act does not place such a reporting duty on an auditor, auditors nevertheless have a duty in terms of other legislation to report any unlawful activities that they uncover in the course of their work, or which they suspect to have been committed. The article also examines whether auditors are required to consider the risk of corruption.
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Karma Sherif, Richard Pitre and Mariatu Kamara
The purpose of this paper is to examine the ability of enterprise systems and embedded controls to prevent unethical behavior within organizations.
Abstract
Purpose
The purpose of this paper is to examine the ability of enterprise systems and embedded controls to prevent unethical behavior within organizations.
Design/methodology/approach
The authors use a case study to explore how the configuration of information technology (IT) controls within enterprise systems and their effectiveness in preventing unethical behavior is compromised by the tone at the top.
Findings
The study highlights the decisive role of cultural values and leadership in moderating the relationship between IT controls and unethical behavior and the realization that ethical environments are socially constructed not enforced.
Research limitations/implications
The limitation of this research is that the authors conducted one case study in an institution of higher education to refute the theory that IT controls embedded within enterprise systems can prevent unethical, and thus, the results may not be generalizable to other industries.
Practical implications
An important implication of the research is that the configuration of information system controls is affected by the organizational culture and the ethical values embraced by top management. When the tone at the top does not emphasize the ethical code of conduct, the configuration of IT controls will be compromised leaving organizations vulnerable at all levels.
Originality/value
Although the authors have a wealth of knowledge on ethics and theories that explain why unethical decision-making continue to surface to the headlines, they have little explanation as to why enterprise systems fail to stop unethical behavior in organizations. This study explores technical, organizational and individual factors that contribute to unethical decision-making.
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Aimee Pernsteiner, Dawna Drum and Adam Revak
There have been many studies that investigated the causes of workarounds, but there is less research on their outcomes, such as the impact on internal control. This study aims to…
Abstract
Purpose
There have been many studies that investigated the causes of workarounds, but there is less research on their outcomes, such as the impact on internal control. This study aims to investigate the use of workarounds by a multinational organization that implemented SAP about 10 years ago, and how those workarounds affected internal controls.
Design/methodology/approach
A qualitative study is performed by analyzing interviews with company personnel for a multinational organization. Employees selected for interviews are primarily users of SAP’s accounting functions.
Findings
Workarounds have significant impacts on the internal controls over financial reporting. Workarounds cause compensating controls to be implemented, which are often manual in nature, and decrease the organizational efficiency and effectiveness.
Research limitations/implications
Workarounds become integrated into an organization’s activities to meet its business needs. This research raises questions to determine when maintaining organizational efficiency and control outweighs the need to provide customer service and other business needs.
Practical implications
Companies should consider whether their business processes can be modified to ensure that they can be handled within the enterprise system. In addition, the number of compensating controls required due to workarounds may decrease the organizational efficiency expected from having an enterprise resource planning system to ensure the integrity of financial information.
Originality/value
This paper moves beyond finding the causes of workarounds, and expands what is known about workarounds and their impact on an organization. An important contribution of this study is to consider the intersection of workarounds, ERP systems and internal controls.
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This paper aims to investigate the financial crises and the role of auditors in those crises. The paper is concerned with the banking system, as the last financial crisis in 2008…
Abstract
Purpose
This paper aims to investigate the financial crises and the role of auditors in those crises. The paper is concerned with the banking system, as the last financial crisis in 2008 was provoked by the mortgage business and the big banks and risks management.
Design/methodology/approach
The paper choses to use data from corporations, practices and professional websites. The authors use interviews that were available and related to the subject matter. Academic works are also used to discuss the literature review and various issues.
Findings
The paper explores the auditors’ responsibilities and finds that there is a growing concern for auditing. This research is complex, as it discovers that corporate executives in the banking business should be more responsible; this is confirmed by the high risks in the financial area that still persists.
Research limitations/implications
This is a very complex topic; however, the authors designed it so that it can be read and used by non-accountants, that is to say, CEOs and governmental agencies that are in charge of the regulatory system. Further research studies are needed to ensure ongoing discussions about the financial crisis. The Word is not free from such bad economic events.
Practical implications
The contribution is important; this research can be used by organizations, governments and academics.
Social implications
The paper includes implications for the banking and auditing industries. It extends to the public interest.
Originality/value
This paper contributes to the literature for academic and can be used for teaching purposes. Students can understand the paper, as the authors did not use a regression model.
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This paper examines published data to develop a model for detecting factors associated with false financial statements (FFS). Most false financial statements in Greece can be…
Abstract
This paper examines published data to develop a model for detecting factors associated with false financial statements (FFS). Most false financial statements in Greece can be identified on the basis of the quantity and content of the qualifications in the reports filed by the auditors on the accounts. A sample of a total of 76 firms includes 38 with FFS and 38 non‐FFS. Ten financial variables are selected for examination as potential predictors of FFS. Univariate and multivariate statistical techniques such as logistic regression are used to develop a model to identify factors associated with FFS. The model is accurate in classifying the total sample correctly with accuracy rates exceeding 84 per cent. The results therefore demonstrate that the models function effectively in detecting FFS and could be of assistance to auditors, both internal and external, to taxation and other state authorities and to the banking system.
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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…
Abstract
Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.
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Kimberly C. Gleason, Charles A. Malgwi, Ike Mathur and Vincent Owhoso
In this exploratory study, we investigate the influence and effects of foreign government corruption on the market value and accounting outcomes of US multinational corporations…
Abstract
In this exploratory study, we investigate the influence and effects of foreign government corruption on the market value and accounting outcomes of US multinational corporations. We use hierarchical cluster analysis on Transparency International Corruption scores to identify high and low corruption in both developed and developing countries. We argue that corruption obscures the true value of assets, makes valuation difficult, and reduces the potential gains of an acquisition. We find that firms acquiring assets from governments in high corruption environments tend to be larger in size and more intangible asset‐oriented than those expanding into low corruption environments. We find that the market responds much more favorably to expansions into low corruption environments than high corruption environments for both acquisitions and joint ventures. We find little evidence that long run accounting performance is adversely affected by government‐multinational relationships in high corruption environments. However, long run market value outcomes are negative for all firms entering into relationships with foreign governments, and are especially negative for joint venture relationships in developing high corruption environments. Finally, we find that systematic risk increases substantially for firms entering high corruption environments through trust‐based modes of expansions.
I synthesize the extant experimental literature examining auditor evaluation of others’ credibility published in six top accounting journals over the last three-and-a-half…
Abstract
I synthesize the extant experimental literature examining auditor evaluation of others’ credibility published in six top accounting journals over the last three-and-a-half decades. I adapt the original definition of credibility by Hovland, Janis, and Kelley (1953): the extent of perceiving someone as competent and trustworthy. Audit guidance requires auditors to consider credibility of management, internal auditors, and staff, yet the research literature on auditor evaluation of others’ credibility is fragmented and scarce, limiting our understanding of determinants and consequences of auditor evaluations. I develop a framework for analysis of research on auditor evaluation of others’ credibility and review extant literature by types of examined effects (determinants of credibility vs. consequences of credibility) and by examined credibility components (competence, trustworthiness, or both). Throughout the literature review I suggest areas for future research.
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R. Jayalakshmy, A. Seetharaman and Tan Wei Khong
To highlight the pressures that the auditors would face in the era of globalisation and the challenges they should be willing to accept in order to maintain trust and integrity.
Abstract
Purpose
To highlight the pressures that the auditors would face in the era of globalisation and the challenges they should be willing to accept in order to maintain trust and integrity.
Design/methodology/approach
A wide range of articles and journals published in international journals as well as local journals has been reviewed. The areas covered include audit fraud, true and fair view interpretation, auditor independence and role of internal auditors. Further, ideas have also been obtained from critical write‐ups in the business magazines on the fall of multinationals.
Findings
A wide range of interpretation has been given by various groups of people on their understanding of the phrase “true and fair”. This has created great confusion as to the interpretation of the audit reports. This has been proven by the fall of many multinationals and the audit pioneers, Andersens. This is one of the causes of audit fraud and it is also seen that as the auditors face an enormous challenge as they enter the twenty‐first century, they should be willing to change their attitudes towards their clients. Professionalism should be in the forefront, and an overhaul in the concept of “true and fair” could probably be the solution to harmonisation of the economy.
Research limitations/implications
This paper lacks statistical data on the views of the authors. It is based purely on secondary data.
Practical implications
Provides awareness to the auditors, corporations and general public on the necessity to revamp the existing auditing practices. This can help the auditors not only to be professionals, but also to be seen as professionals.
Originality/value
This paper provides scope for research in this area to identify whether the overhaul concept is acceptable. If yes, what should the new concept be? If no, what is the solution to the existing public outcry?