Enhancing Auditors’ Fraud Risk Assessment by Using a Throughput Model as a Decision Aid

• In Event: Continental Breakfast and Research & Education Forum
  In Paper Session: Table 5: Audit Risk II

Abstract

Auditors’ task of assessing fraud risk is a critical step that affects auditing planning and procedures; especially after the recent major financial scandals. Several prior studies suggest that a decision aid is an effective way to improve fraud risk assessment and professional skepticism. Following the recommendation in SAS No. 82 and 99 along with fraud triangle factors, this research paper suggests a Throughput model (TP) to work as a decision aid, TP model break up the decision making into four main dominant concepts: perception (P), Information (I), Judgment (J) and decision Choice (D). This decision aid is expected to be beneficial in the performance of comprehensive fraud risk assessments, and convey the auditor’s attention to wide classes of problems especially when they are associated with the SAS No. 99 requirement. Finally, this paper employed one of the ethical pathways in the TP model, which is explained in the literature as virtue ethics theory. The auditor would support his/her perception by collecting information that will be filtered also by perception and go to the judgment and analysis level to reach a decision choice about the level of fraud risk. We conclude with practical implications and future research directions.

Authors

• BADRIYA AL SHAMMAKHI, HULL UNIVERSITY

• Waymond Rodgers, University of Texas at El Paso