Enhancing Auditors Ability to Identify Opportunities to Commit Fraud in Automated System Environments：The Use of Case Studies.pdfVIP

Enhancing Auditors’ Ability to Identify Opportunities to Commit Fraud in Automated System Environments: The Use of Case Studies by: Denise Dickins East Carolina University and John T. Reisch East Carolina University ABSTRACT: Research suggests that audit team members, especially staff, may lack the necessary training to be able to identify fraud risks and to develop appropriate responses to identified fraud risks (e.g., Knapp and Knapp 2001; Braun 2000; Zimbelman 1997). This lack of training may be particularly acute with respect to the perpetration of fraud in automated environments (Filipek 2007). We find evidence that supports our hypotheses that future staff auditors exposed to and practicing with example cases where fraud is perpetrated in automated environments, are better able to recognize indicators of fraud in automated environments and to develop appropriate audit responses to identified fraud opportunities (audit tests and recommendations) than future staff auditors who are not exposed to or practice with example cases. Key Words: fraud identification; IT auditing; cognitive constructivism Enhancing Auditors’ Ability to Identify Opportunities to Commit Fraud in Automated System Environments: The Use of Case Studies INTRODUCTION The notorious fraud headlines surrounding Enron, WorldCom, and other high profile companies during the last decade has led the accounting profession with a daunting task of restoring its public image. The creation of the Public Company Accounting Oversight Board (PCAOB) under the Sarbanes-Oxley Act of 2002 (the Act) and the stringent testing of internal controls required under the Act, have h