THE ROLE AND STRATEGIES OF AUDITORS IN FRAUD PREVENTION IN A BUSINESS ORGANISATION
1.1 Background of the study
In our society where the business culture has been overridden in recent times with fraudulent practices penetrated by management and employees, the lack of clear understanding of the duties of an auditor in relation to fraud prevention has often led to unjustifiable criticisms of his role. Auditors are known to be competent, honest and independent professionals who express unbiased opinion on the truth and fairness of the financial statement as presented by management to members of the company.
The role of the auditors is to express an opinion on the financial statements. It is important to remember that while auditors do have important responsibilities, management (director of the company) is primarily responsible for the fairness of the company’s financial statements. 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, and has been one of the most frequently debated areas amongst auditors, politicians, media, regulators and the public (Gay, 2007). This debate has been especially highlighted by the collapse of both small and big corporations across the globe.
Regulations such as the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), the 1997 Organization for Economic Co-operation and Development Anti-Bribery Convention, the U.S. Sarbanes-Oxley Act of 2002, the U.S. Federal Sentencing Guidelines of 2005, and similar legislation throughout the world have increased management’s responsibility for fraud risk management.Reactions ………………………………………..
1.2 Statement of the Problem
All organizations can be a risk of fraud. As we know, large frauds will lead to the collapse of the entire organizations, causing major losses to investors, an important legal cost, affecting directly to key individuals, and loss of confidence in capital markets. Publicized fraudulent behavior by key executives has negatively impacted the reputations, brands, and images of many organizations in the worldwide.
1.4 Research Questions
- is there any significant relationship between the role of the auditor and fraud prevention in Lucky Fibre?
- is there any significant………………………………?
iii. is there any significant relationship between the auditor age and fraud prevention in Lucky Fibre?
- is there any significant relationship between the auditor experience and fraud prevention in Lucky Fibre?
1.5 Research Hypotheses
The following hypotheses seek to answer the research questions:
Ho1: There is no significant relationship between the role of the auditor and fraud prevention in Lucky Fibre.
Ho2: There is no significant relationship between the auditor strategy and fraud prevention in Lucky Fibre.
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This chapter makes an attempt to review related literatures to give solid support from earlier studies to this study. The organization of this chapter is as follows:
2.0. Literature Review
2.2 Types of Fraud
2.3 Auditor Role in Fraud detection
2.4 Auditors’ responsibilities in fraud detection and prevention
2.5 Why Have An Audit?
2.6 Duties of An Auditor
2.7 Empirical studies on fraud detection
3.1 Research Design
The research design adopted for this study is descriptive and therefore descriptive research design will be employed.
3.4 Research Procedure
The researcher visited the factory as well as various segment that make up the factory to seek for permission. After permission had been obtained from the manager, the questionnaire on the role and strategies of auditors in fraud prevention (RSAFP) will be administered to the respondents through the assistant of the manager of the selected segment.
The questionnaire will be retrieve back 30 minutes after administration, the same procedure will be followed in all the segments selected in the factory for the study.
3.9 Method of Data Analysis
The data generated will be analyzed using simple count percentages. Computation for the afore mentioned methods of data analysis will be done using SPSS 14.00 package.
Table 4: Analysis on relationship between auditor age and fraud prevention
Table 4 above shows a mean value of 1.740 and 17.29 respectively with standard deviation of 0.579 and 2.392 for age and fraud prevention respectively at 0.05 level of significance. The level of significance of 0.000 on
the table which is less than 0.05 shows that the hypothesis is accepted, Since 0.000 < 0.05. This simply implies that there is no significant relationship between the auditor age and fraud prevention in Lucky Fibre.
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