Business busts and U.S. auditors' interest in fraud detection: Evidence from the 20th century

Moussalli, Stephanie D., Karahan, Gökhan, & Islam, Muhammad Azizul (2016) Business busts and U.S. auditors' interest in fraud detection: Evidence from the 20th century. Journal Of Business, Industry, and Economics, 21(Spring), pp. 1-39.

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Abstract

We find evidence that U.S. auditors increased their attention to fraud detection during or immediately after the economic contractions of the 20th century, based on a content analysis of the 12 volumes of the 20th-century auditing reference series Montgomery’s Auditing. Contractions, however, do not seem to have affected auditors’ attention to the formal goal of fraud detection. The study suggests that auditors’ aversion to the heightened risks of fraud during economic downturns leads them to focus more on fraud detection at those times regardless of the particular guidance in formal audit standards. This study is the first to find some evidence of a recession-influenced difference between fraud detection practices and formal fraud detection goals.

Impact and interest:

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ID Code: 94494
Item Type: Journal Article
Refereed: Yes
Additional URLs:
Keywords: Busts, Auditors, Public Interest, Legitimacy, Fraud, Evidence
ISSN: 2379-3554
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Copyright Owner: Copyright 2016 University of North Alabama
Deposited On: 06 Apr 2016 03:21
Last Modified: 11 Apr 2016 04:02

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