An outlier is defined as an observation that is significantly different from the other data in its set. An auditor will employ many techniques, processes and tools to identify these entries, and data mining is one such medium through which the auditor can analyze information. The enormous amount of information contained within transactional processing systems' logs means that auditors must empl...

This study investigates the nature and extent to which managerial attitudes influence fraud risk perceptions, observations and experiences of audit partners. Using a sample of 5,603 client acceptance and audit continuance assessments at a Big Four audit firm in the Netherlands, this study finds that: (1) manager integrity, honesty, and ethics are considered by audit partners to be of highest im...

Pentagon fraud is one type of financial that occurs in companies. when a company hides or deceives statements to reduce the amount taxes it must withhold increase value for investors report. The purpose this study was examine and analyze effect pentagon variable on statement with dependent proxy being F-Scores. While independent variables used are stability (ACHANGE), target (ROA), nature indus...

Auditors may encounter misstatements during the course of an audit, each of which requires a binary materiality assessment. We propose a fuzzy expert system approach that assesses materiality as a continuous characteristic by allowing a misstatement to possess a degree of materiality between 0 and 1. This potentially allows the auditor more flexibility and precision in materiality assessment, a...

We examine whether the provision of non-audit services by auditors is negatively correlated with firm value and the quality of earnings. Because of concerns regarding the effect of non-audit services on auditor independence, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees pai...

Practical problems of income tax enforcement are characterized by the fact that auditing of tax payers has to be done by employees of the enforcement authority who may not be motivated to act in it's best interest. We study a form of auditor moral hazard, where the auditor can shirk on his auditing e®ort and claim to have found no evidence of irregular behavior of tax payers. This would make hi...

SYNOPSIS: Earnings management remains a popular topic of debate and discussion among investors, regulators, analysts, and the public. One mechanism that might mitigate earnings management is auditors’ industry expertise. Using a large sample of clients of Big 6 auditors, this research examines the association between auditor industry expertise, measured in terms of both auditor market share in ...

Extant research typically uses a variation of Big N auditor, discretionary accruals, audit fees, accrual quality, going-concern opinions, or meet or beat the quarterly earnings target as a proxy for audit quality. We provide evidence on the construct validity of these measures by evaluating whether they are able to successfully predict alleged audit deficiencies in engagements that are the subj...

This study analyzes the pricing of auditors’ business risk in the first year of an audit engagement. We posit that reportable events from the prior auditor’s tenure that are disclosed in the 8-K auditor change filing provide reliable information about the level of business risk for the incoming auditor. We hypothesize that for clients perceived as risky, the incoming auditor charges a fee-premi...

Conducting a Security Audit of an Oracle Database The focus of the paper is on auditing access controls to Oracle databases. What should the auditor evaluate and test to enable him to give an informed opinion about the security of an information system based on an Oracle database? A number of issues that the auditor should evaluate are discussed in the paper, with indications of how these issue...