The Fraud Auditing Mission: the Identification of a Fraud Risk Profile Using “Red Flags” Technique
Author:
University Professor Marilena MIRONIUC, Ph. D.; Ioan-Bogdan ROBU, Ph. D. Student
JEL:
C38, M41, M42
DOI:
Keywords:
red flags, fraud auditing, fraud risk profile, factor analysis
Abstract:
The major financial scandals have significantly contributed to the destabilization of the economic and financial worldwide environment, by short-circuiting financing-investment flows, by discrediting the financial markets, and also by the financial, social and political effects that has caused them. The response of the accounting profession, through the crucial role of the auditors to issue an independent, objective and a professional opinion about the accuracy of the financial statements, was to promote a new panacea, the fraud auditing, responsible only with the financial fraud prevention and detection. For its good conduct the fraud auditing has its own methodology and a number of custom tools, useful to the auditors in the audit mission. Thus, from a sample of 65 fraud firms (famous worldwide cases) and un-fraud firms, the authors of the present study intend to identify a risk profile of financial fraud, due to the auditor in the prevention and detection of these reprehensible acts. The results obtained allowed the identification of the audit trails, in conjunction with the International Financial Reporting Standards, to determine the risk of fraud predispose areas. Validation of the working hypothesis was based on the ratio technique used to obtain the financial indicators, and on the multiple factorial analysis of correspondences. Data processing was performed using SPSS 19.0 statistical software.\r\n\r\n\r\n