The Role of Auditing in the Management of Corporate Fraud

Kamil Omoteso, Musa Obalola

    Research output: Chapter in Book/Report/Conference proceedingChapter

    2563 Downloads (Pure)

    Abstract

    Purpose This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud. Design/methodology/approach The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds. Findings The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud. Research limitations/implications The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations. Practical implications As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes. Originality/value The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.
    Original languageEnglish
    Title of host publicationDevelopments in Corporate Governance and Responsibility
    EditorsRoshima Said, David Crowther, Azlan Amran
    PublisherEmerald Group Publishing Limited
    Pages129-151
    Volume6
    ISBN (Print)978-1-78350-673-6
    DOIs
    Publication statusPublished - 2014

    Fingerprint

    Fraud
    Auditing
    Audit committee
    External audit
    Audit
    Business risk
    Internal control
    IT adoption
    Design methodology
    Internal control system
    Internal audit
    Holistic approach
    Nature
    Factors
    Opportunity cost
    Internal audit function
    Assurance services
    Novelty

    Bibliographical note

    "This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here http://dx.doi.org/10.1108/S2043-052320140000006006 . Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited."

    Keywords

    • auditing
    • internal control
    • corporate fraud

    Cite this

    Omoteso, K., & Obalola, M. (2014). The Role of Auditing in the Management of Corporate Fraud. In R. Said, D. Crowther, & A. Amran (Eds.), Developments in Corporate Governance and Responsibility (Vol. 6, pp. 129-151). Emerald Group Publishing Limited. https://doi.org/10.1108/S2043-052320140000006006

    The Role of Auditing in the Management of Corporate Fraud. / Omoteso, Kamil; Obalola, Musa.

    Developments in Corporate Governance and Responsibility. ed. / Roshima Said; David Crowther; Azlan Amran. Vol. 6 Emerald Group Publishing Limited, 2014. p. 129-151.

    Research output: Chapter in Book/Report/Conference proceedingChapter

    Omoteso, K & Obalola, M 2014, The Role of Auditing in the Management of Corporate Fraud. in R Said, D Crowther & A Amran (eds), Developments in Corporate Governance and Responsibility. vol. 6, Emerald Group Publishing Limited, pp. 129-151. https://doi.org/10.1108/S2043-052320140000006006
    Omoteso K, Obalola M. The Role of Auditing in the Management of Corporate Fraud. In Said R, Crowther D, Amran A, editors, Developments in Corporate Governance and Responsibility. Vol. 6. Emerald Group Publishing Limited. 2014. p. 129-151 https://doi.org/10.1108/S2043-052320140000006006
    Omoteso, Kamil ; Obalola, Musa. / The Role of Auditing in the Management of Corporate Fraud. Developments in Corporate Governance and Responsibility. editor / Roshima Said ; David Crowther ; Azlan Amran. Vol. 6 Emerald Group Publishing Limited, 2014. pp. 129-151
    @inbook{a8b60f98f4384ab48f054b5ef6043b06,
    title = "The Role of Auditing in the Management of Corporate Fraud",
    abstract = "Purpose This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud. Design/methodology/approach The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds. Findings The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud. Research limitations/implications The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations. Practical implications As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes. Originality/value The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.",
    keywords = "auditing, internal control, corporate fraud",
    author = "Kamil Omoteso and Musa Obalola",
    note = "{"}This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here http://dx.doi.org/10.1108/S2043-052320140000006006 . Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.{"}",
    year = "2014",
    doi = "10.1108/S2043-052320140000006006",
    language = "English",
    isbn = "978-1-78350-673-6",
    volume = "6",
    pages = "129--151",
    editor = "Roshima Said and David Crowther and Azlan Amran",
    booktitle = "Developments in Corporate Governance and Responsibility",
    publisher = "Emerald Group Publishing Limited",

    }

    TY - CHAP

    T1 - The Role of Auditing in the Management of Corporate Fraud

    AU - Omoteso, Kamil

    AU - Obalola, Musa

    N1 - "This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here http://dx.doi.org/10.1108/S2043-052320140000006006 . Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited."

    PY - 2014

    Y1 - 2014

    N2 - Purpose This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud. Design/methodology/approach The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds. Findings The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud. Research limitations/implications The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations. Practical implications As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes. Originality/value The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.

    AB - Purpose This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud. Design/methodology/approach The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds. Findings The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud. Research limitations/implications The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations. Practical implications As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes. Originality/value The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.

    KW - auditing

    KW - internal control

    KW - corporate fraud

    U2 - 10.1108/S2043-052320140000006006

    DO - 10.1108/S2043-052320140000006006

    M3 - Chapter

    SN - 978-1-78350-673-6

    VL - 6

    SP - 129

    EP - 151

    BT - Developments in Corporate Governance and Responsibility

    A2 - Said, Roshima

    A2 - Crowther, David

    A2 - Amran, Azlan

    PB - Emerald Group Publishing Limited

    ER -