Auditor’s responsibility for uncovering fraud All the auditors sampled and 29.2 per cent (seven persons) of the users strongly disagreed that it was the auditors’ role to detect fraud, as the scope of their duties prohibited them from doing so. The quantitative results at Table I reveal a statistical significant difference with auditors and users on the point about auditors’ responsibility for uncovering fraud (t ¼ 26:333, df ¼ 23, p , 0:001). The auditor group showed a significantly lower mean score of 1.00 compared to the user group who had a higher mean score of 3.38. The low mean was expected from the auditors, as well as from five of these seven users who had accounting qualifications that would have influenced their perceptions.
One auditor argued that:
The role of the auditor is not to detect fraud, but in planning an audit so that there is reasonable expectation of discovery. The public is not sufficiently educated on the role of the auditor and this leads to unrealistic expectations on the part of clients, investors and others with vested interests.
However, the other users were adamant that detecting fraud was not just the auditors’ responsibility but also the main objective of an audit. One user queried, “. . . then, why pay for an audit?”. In contrast, one partner at a major audit firm argued that:
Fraud detection is the responsibility of management, who controls the day-to-day running of the organisations. Auditors are not responsible for prevention and detection. We must do continuous risk assessment and tailoring of our audit strategy to suit. The attitude of professional scepticism also implies management must also be considered as a risk factor.
The risk-based audit procedures used by auditors prohibited them from being totally responsible for fraud detection. The reporting of fraud is to management and the shareholders. Results of the independent t-test revealed that there is a statistical significant difference (t ¼ 25:655, df ¼ 24:724, p , 0:001) between auditors and users on the need to legislate auditors to be responsible for uncovering fraud and reporting to authorities (see Table I). There appears to be strong disagreement among auditors (mean ¼ 1:11) for such legislation compared to the significantly higher users perception of agreement (mean ¼ 3:25). Those who supported further legislation felt that society in general would benefit, while those who opposed felt that it was not feasible as the audit is already being viewed as expensive and therefore had no benefits. One auditor queried: “Who will bear the additional costs of auditing when clients are restricting us to fixed fees?”
One factor that was evident from the information collected was that the educational background in terms of accounting knowledge influenced whether the interviewee perceived that the auditor should detect fraud. The majority of the interviewees with an accounting background or qualification expressed the view that auditors were not responsible for detecting fraud. This included the auditors and several management respondents who had accounting knowledge. However, users without that accounting knowledge held the opposing view.