Financial Crime World

Internal Fraud in Egypt: A Comprehensive Review and Future Research Directions

Summary of Findings

Prevalence of Internal Fraud

  • Secrecy culture and lack of transparency: Egypt’s culture of secrecy and lack of transparency contribute to the likelihood of internal fraud.
  • Poor government accounting systems: The country’s government accounting systems are not well-established, making it difficult to detect and report internal fraud cases.
  • High risk of financial reporting fraud: There is a high risk of financial reporting fraud in Egypt due to improper disclosure and overstatement of revenues.

Corruption and Regulatory Environment

  • Widespread corruption: Corruption is widespread in Egypt, with both grand and petty corruption hindering business operations and growth.
  • Anti-corruption institutions: Anti-corruption and anti-money laundering institutions exist but are insufficient to address the issue.
  • Regulators’ focus on corruption: Regulators’ efforts are more focused on combating corruption rather than asset misappropriation and financial reporting fraud.

Professional Bodies and Audit Quality

  • Lack of professional bodies for anti-fraud education: There is a lack of professional bodies dedicated to anti-fraud education in Egypt.
  • Challenges for external auditors: External auditors may face challenges in discharging their responsibility for fraud as per ISA 240 due to governance issues.

Implications for Future Research

Research Gaps and Directions

  1. Investigate internal fraud cases: Investigate the prevalence and types of internal fraud cases in Egypt, including financial reporting fraud and asset misappropriation.
  2. Evaluate anti-corruption efforts: Analyze the effectiveness of anti-corruption and anti-money laundering institutions in addressing corruption and money laundering.
  3. Examine governance issues: Examine the impact of governance issues on audit quality and external auditors’ ability to discharge their responsibility for fraud.
  4. Develop anti-fraud education programs: Develop and implement effective anti-fraud education programs for professionals and stakeholders in Egypt.
  5. Assess compliance with ISA 240: Evaluate the compliance of audit firms with ISA 240 and international standards on auditing.

By addressing these research gaps, you can contribute to a better understanding of internal fraud in Egypt and provide insights for improving governance, accountability, and transparency in the country’s business environment.