Udviklingen i besvigelsesteorier og konsekvenserne for revisor

Chanette Han Linder & Pernille Erdmann Gissel

Student thesis: Master thesis


The focus on fraud has increased since the beginning of the 21st century because of the major corporate scandals. The purpose of this thesis is to examine the evolution of fraud theory and the impact it can have on auditing standards and practices. The most basic and commonly used theory within fraud is The Fraud Triangle, which is used in ISA 240. The fraud triangle consists of the three elements: opportunity, pressure and rationalization. However, there has been some criticism of this model. The latest trend within fraud theory is to consider the characteristics of the fraudster, which The Fraud Triangle does not consider. We have analysed some of the most important elements of ISA 240 in both theory and practise in order to examine whether the criticism of The Fraud Triangle is actual. Therefore, we have interviewed 8 auditors. Based on these interviews, it became clear to us that the criticism of The Fraud Triangle is consistent with the problems, which the interviewed auditors have. Based on our analysis, we have come up with some suggestions for improvements to ISA 240 and auditing practise. Firstly, the terminology in ISA 240 should be changed so that integrity is used instead of rationalization because rationalization cannot be observed. Secondly, ISA 240 and auditing practise should use a fraud theory, which take into account that there is more than one type of fraudsters. We believe the fraud theory The Fraud Scale is the most useful. Both theorists and practitioners agree that auditors can benefit from interviewing employees other than the companies management about the risk of fraud. However, this act is rarely used because it is very time consuming. Another way to solve this could be done by using questionnaires. Overall we believe that ISA 240 is adequate in detecting a material misstatement due to fraud in financial statements. However, we believe that the wording in ISA 240 paragraph 15 should be changed. The auditor should take into account his professional assessment of management’s honesty and integrity. Auditors must be careful to assess the risk of fraud separately and be more critical in their approach to the audit. Furthermore it could be an advantage to educate auditors in interview techniques. This will allow the auditor to better judge the personal and company characteristics of the client.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2013
Number of pages125