In recent years, society’s focus related to fraud has increased significantly. This is partly due to an increased media focus related to corporate scandals. Meanwhile, the level of fraud schemes is increasing in number and monetary value. The media tend to focus on the auditors’ responsibility related to these fraud incidents, mainly due to the auditor’s role as the representative of the public. The media and the public have difficulties in understanding why the auditors did not uncover the fraud, which led to a major criticism of the auditors. The above-mentioned actions have led to the composition of this thesis, which investigates the criteria for an action to be classified as fraud. The thesis also clarifies an auditor’s responsibility regarding the investigation of fraud and the suspicion of fraud inside a company, for which the auditor is accountable. Brenda Porter and Bent Warming have published several studies regarding the gap in expectations between auditors and various groups in the society. These studies deal with the expectation of certain groups of users of financial statements when it comes to auditors performing an audit versus agreed upon procedures. This thesis investigates whether or not the gap in expectations still exists between state authorized public accountants, company owners, and shareholders, when it comes to performing an audit versus agreed upon procedures regulated by various accounting standards and legislation through a quantitative survey in form of a questionnaire. Furthermore, the thesis investigates how the gap in expectations has evolved since Bent Warming made his studies in 1990 and 2001. This thesis concludes that fraud is defined as “An intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage”. The auditors are bound by certain legal standards and accounting principles related to the discovery of fraud or the suspicion hereof. Furthermore, the thesis concludes that the users of financial statements have unrealistic expectations towards the auditors when it comes to agreed upon procedures and the procedures the auditor must complete during an audit, defined by legislative framework and accounting principles. The thesis also reaches the conclusions that the gap in expectations between users of financial statements and the auditors still exists, that the gap in expectations has increased, and that the gap will remain, as long as the legislation and accounting principles stay unchanged.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||155|
|Supervisors||Kim Klarskov Jeppesen|