Revisors rolle ved regnskabsmanipulation: Single case study IT Factory A/S

Lea Ahrenkiel-Frellsen

Student thesis: Master thesis


The thesis is about how the review by the auditors ean be improved in terms of preventing accounting manipulation, and about the limits of what ean reasonably be expected of the auditing of the company's annual report in terms of deteeting such manipulation. The thesis is built upon single case study IT Faetory AIS. The case of IT Factory AIS is not a case in which the manipulation of accounting figures was discovered by the auditors. Maybe the fraud was of a kind that made it impossible for the auditors to discover it. Alternatively, it may have been the case that the auditors would have been more suspicious of the accounting figures if they had had abetter understanding of the business model. There was also substantial information on leases that were not incJuded in the annual report. The auditors made no remarks in their endorsement of the annual report despite knowing about the lease agreement. Fraud in IT Factory AIS was performed by the company director without the employees and the board knowing it. The fraud was preferably committed through false signatures on leases. The auditing profession is of the view that auditors are only required to discover fraud that distorts the true image (impression) created by the annual report and those they are not responsibie for the detection of false signatures. But is this a reasonable limitation of their responsibility? The thesis concludes that it might have been possibie in the case of IT Factory AIS to detect false signatures by reviewing samples of leasing contraets - as is ordinarily done for other kinds of other expenses.By obtaining samples of leasing contraets from the leasing companies - as it is done for other financial contraets - the auditors could probably have discovered the falsified contracts, as well as the existence of financialleasing assets which should be reported in the annual report. Finally, a general business understanding obtained through analysis, interviews with staff, observation and examination would have disclosed that the company leased the assets at a higher price than that at which they sold it to their customers. Such a business model is cJearly not sustainable. In relation to auditing in general, the thesis concludes that despite the limitation created by the faet that the audit is limited by the elient's willingness to pay, and the Iimitation created by the possibility of collusion between multiple parties, an auditor should be able to make it possibie for other stakeholders to deteet fraud from reading the annual report, if the auditor adheres to existing legal regulation and accounting standards, and also understands the business model. As mentioned earlier, it was not the auditors of IT Factory AIS who detected the fraud in the company.. But if the auditors had fulfilled the obligation to check on leasing contraets, it would Iikely have been possibIe for others to discover the fraud when they read the annual report.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2009
Number of pages82