The thesis deals with the topic how external audits can prevent and detect fraud in great companies' organisation. The logic behind this topic is that all companies may face the risk of fraudulent activities in the organisation. In the early 2000s, accounting fraud was a hot topic for the SEC when several famousfraud scandals at companies such as Enron, WorldCom and HealthSouth shook investor confidence in the financial market. This fraudulent behaviour can lead to the collapse or severely damage a company’s reputation.
When fraud appears in a company, people will start asking who will be responsible for preventing and detectingfraud. Shareholder or stakeholder who read financial statements believes that external auditors play a critical role regarding the accuracy of the financial statement. It is important to have high quality external auditor in detecting fraud and to investigate existing auditing procedures to prevent the possibility of fraud occurs.
Table of Contents
- Rationale
- Research Objectives
- Research questions
- Literature review
- Overview of external audit role in the organization
- External audit responsibility on fraud detection.
- External audit aid in preventing fraudulent activities
- Research Methods
- Conclusion/ Research outcome
- References
Objectives and Key Themes
This research paper aims to investigate the critical role of external auditors in detecting and preventing fraudulent activities within organizations. The study will explore the effectiveness of external audits in identifying and mitigating fraud, considering the methods employed by auditors and their overall impact.
- The impact of fraudulent activities on organizations and the broader economic landscape.
- The role of external auditors in financial reporting and fraud detection.
- The effectiveness of external audit practices in preventing fraudulent activities.
- The application of the fraud triangle theory in understanding the motivations behind fraudulent behavior.
- The importance of effective internal controls and governance systems in mitigating fraud risk.
Chapter Summaries
- Rationale: This chapter introduces the research topic and highlights the significance of understanding the role of external audits in preventing and detecting fraud. It discusses the impact of notable fraud scandals on investor confidence and emphasizes the responsibility of auditors in safeguarding financial integrity.
- Research Objectives: This section outlines the specific research goals, focusing on analyzing the effectiveness of external audit practices in preventing and detecting fraudulent activities within organizations.
- Research questions: The chapter presents three key research questions that will guide the analysis, exploring the roles and responsibilities of external auditors in fraud detection and prevention.
- Literature review: This chapter provides an overview of external audit practices, emphasizing their role in financial reporting and compliance. It explores the responsibilities of external auditors in identifying and mitigating fraudulent activities.
Keywords
The primary focus of this research revolves around the effectiveness of external audit practices in detecting and preventing fraudulent activities within organizations. Key themes include fraud detection, prevention, external audit responsibilities, internal controls, the fraud triangle theory, and the impact of fraudulent activities on organizational integrity and investor confidence.
- Quote paper
- David Onditi (Author), 2017, Fraud prevention and detection. External audits in the organisation of great companies, Munich, GRIN Verlag, https://www.grin.com/document/499795
