The Role of Auditing in the Management of Corporate Fraud

Kamil Omoteso, Musa Obalola

    Research output: Chapter in Book/Report/Conference proceedingChapter

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    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

    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

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  • 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