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Study Reveals External Auditors’ Responsibility in Detecting Financial Corruption and Fraud

A recent study conducted among Jordanian public shareholding companies has shed light on the role of external auditors in detecting financial corruption and fraud. The study aimed to assess the applicability and readability of the questionnaire.

Methodology

The results show that the internal consistency reliability of each dimension varies from 88.1% to 91.8%, indicating acceptable reliability. The study also found that the highest percentage of respondents held a Bachelor’s degree in accounting, with 62% having working experience of 21-25 years.

Results

According to Table 2, the distribution of the sample by business certification shows that:

  • 39% of respondents hold JCPA certifications
  • 50% have an academic major in accounting

The study also found that the external auditor is responsible for discovering financial corruption and fraud (mean: 4.10; standard deviation: 0.79).

Obstacles to Effective Performance

The study further revealed that there are several obstacles affecting the ability of external auditors to perform their professional responsibilities, including:

  • Lack of understanding of their role
  • Inadequate audit fees
  • Lack of agreement with clients on duties and responsibilities

Methods for Reducing Audit Risk

In addition, the study found that external auditors recognize the importance of following certain methods and procedures to reduce audit risk and detect fraud and corruption cases. These include:

  • Attending meetings of management and audit committees
  • Inquiring about lawsuits filed by companies
  • Conducting regular audits

Key Findings

  • External auditors are responsible for discovering financial corruption and fraud.
  • There are several obstacles affecting the ability of external auditors to perform their professional responsibilities.
  • External auditors recognize the importance of following certain methods and procedures to reduce audit risk and detect fraud and corruption cases.

Conclusion

The study highlights the crucial role of external auditors in detecting financial corruption and fraud. However, it also identifies several obstacles that hinder their ability to perform their duties effectively. Regulatory bodies, auditing firms, and companies should take note of these findings and work towards creating a more conducive environment for external auditors to fulfill their responsibilities.

Recommendations

  • Regulatory bodies should provide training programs for external auditors to enhance their skills and knowledge.
  • Auditing firms should prioritize the development of their staff and ensure adequate audit fees are charged.
  • Companies should ensure that they have a clear understanding of their duties and responsibilities in the audit function.