Comprehensive Review of Auditing and Accounting Research

The provided document is a collection of research papers and articles related to auditing and accounting. It includes studies on audit quality, internal control weaknesses, and financial reporting fraud, as well as discussions on the impact of continuous auditing on internet-reported financial information and the role of auditors in corporate tax aggressiveness. The document also explores new visions for internal audit and the importance of independence and competence in achieving high-quality audits.

Research Proposal

Table of Contents
INTRODUCTION...........................................................................................................................3
Literature review..............................................................................................................................4
Theme 1 The common financial statements' fraud prevention and detection mechanic, and
their level of effectiveness in Ghana and their significance difference between them..........4
Theme 2 Different ways for financial statements' fraud undertaking....................................6
Theme 3 The factors that hinder the use of the internal audits in financial statements' fraud
prevention and decision in Ghana..........................................................................................7
Theme 4 The practitioners opinions regarding the use of internal auditing in the prevention
and detection of the financial statement's fraud in Ghana......................................................8
RESEARCH METHODOLOGY.....................................................................................................9
Research philosophy...............................................................................................................9
Research approach..................................................................................................................9
Research design......................................................................................................................9
Data collection .....................................................................................................................10
Data analysis.........................................................................................................................10
Ethical consideration............................................................................................................10
Research limitations.............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In this report the effect of the internal auditors as a tool of preventing the financial
statement fraud will be explain and according to that aims and objectives will set by the
researcher so that they can make the questionnaire and themes regarding it. The research
proposal will also be explained in this report for effective and efficient understanding of the
people. The research questions will help us to understand the entire topic with their rationales.
Furthermore, it will explain the research methodology and research methods which are
adopted for doing the research and in addition to this explanation of different methods for
empirical data.
MAIN BODY
The effect of the internal auditors as a tool for intervening the financial statement's fraud
within the assembly will let explain the entire procedure regarding the fraud and its impact other
so that it effective measure can be taken to eliminate the risks(Bala, Labonté- LeMoyne, and
Léger,, 2017). As it is the auditors' responsibility to obtain the reasonable assurance that the
financial statements get free from the material mis statements and they should maintain the
professional structure through the audit.
Auditor should know the risks of non detecting of management of fraud is much greater than any
employees' fraud. They need to be aware of non detection of fraudulent activities
Aims and Objectives:
Aim: Identifying the effect of Internal auditors as a tool for preventing the financial statements'
fraud.
Objectives:
 To assess the risk
 To assure that financial statements are free from material misstatement
 to ascertain the fraud risk in auditing so to adopt corrective measures to eliminate the
risks
 to protect the organisation from any fraud
 To examine the relationship between the financial statement fraud and organisational
performance
Research questions
1. What are the common financial statements' fraud prevention and detection mechanic, and

their level of effectiveness in Ghana?as there is any significance difference between them?
2.In what ways are financial statements' fraud undertaking?
3.What are the factors that hinder the use of the internal audits in financial statements' fraud
prevention and decision in Ghana?
4.What are the practitioners opinions regarding the use of internal auditing in the prevention and
detection of the financial statement's fraud in Ghana?
Rationale
There are many reasons because of which the research is required to be done in order to
re-evaluate and identify the reasons for solving the issue of fanatical statements' fraud. There are
many fraud prevention and detection mechanism which at undertake to increase the level of
efficiency and they also help the organisation in taking the steps and measure which prevent
them from the financial esteem and fraud( Chu, 2015). Some opinion are also undertaken in the
report regarding the use of the internal audits so that organ' can prevent them from the financial
statements' fraud in Ghana.
The reason for choosing these questions is also to identify the measures through which it
can be interpreted and identified the different available measures which help in solving this issue
or eliminating the risk of the financial statements frauds. In addition to this questionnaire is also
prepared for understanding ad evaluating some factors which will hinder the use of the internal
audits in financial statements' fraud prevention and decision. Which ultimately prevent the
organisation in making the wrong decision(Davies and Francis, 2018)
Literature review
Theme 1 The common financial statements' fraud prevention and detection mechanic, and their
level of effectiveness in Ghana and their significance difference between them.
The financial statement fraud is one of the most crucial type of fiscal fraud which any
organisation may suffer. The financial statements' fraud occurs in the organisation less frequently
compared to the asset misappropriation and corruption but the losses from these crimes are much
greater. There are many methods which are used and optimally utilized in order to improve the
appearance of the organisational financial statements(De Groot and Hagoort,2017).

Fraud is basically a deception or misrepresentation's which made by the individual or
entity who actually knows that the misrepresentation can result in some unauthorized benefit to
the entity or one other party have a great impart on the organisation and their goodwill. Financial
statement fraud can take place in many forms(Lewis, 2015).
Some common approaches to artificially improve the appearance of the financial includes
the overstating revenues by recording the future expected sales, understanding expenses through
such means as capitalizing the operating expenses, inflating the assets, hiding obligations,
incorrect disclosure of the related party transactions, structure financial deals, etc. Some basic
financial statements' fraud which are classified as fictitious sales, improve expense recognition,
incorrect asset valuation, Unmatchable and unsuitable disclosures, Hidden liabilities(Mannay,
2015). There is also another type of financial statement fraud which includes the practice or
procedure by which firm will understate the revenues in on accounting period and maintain them
as a reserve for the future periods with worse performance. These procedures remove the
appearance of volatile from the operations.
Some undesirables situations which contributes to waste of resources and fraud which
are also called as financial statements' fraud red flags that is they also provide the general
overview of the warning signs to the investors to take in into the consideration. This is not
indicated the occurrence of the financial statements' fraud but it helps in research which must be
conducted to assess the validity of the corporate documents(Taylor, Bogdan, and DeVault.,
2015). This information will be helpful for the creditors to ensure that loan must be given to the
entities which are not operating with the risks .most essential and common financial statements'
fraud red flags are :
 Consistent sales growth while establishing the competitor are experiencing the period of
weak performance. The reason behind this is to the efficient business operations rather
than the fraud related activities.
 An unexpected and continuous rise in the number of day's sales in receivables with the
growing inventories. This will obsolete the goods for which the firms records the
fictitious future sale(Thomas, Nelson, and Silverman, 2018).

 A significant upward movement of the company's performance within the final reporting
period. Then in this situation company may under the immense pressure to meet the
expatiation of the analysts
 Company maintaining the consistent gross profit margins in order to potentially indicate
failure to recognize the expenses or recognizing the revenue and many others(Thomas,
Nelson, and Silverman, 2018).
There are some methods which helps the organisation' in detecting the financial
statements' fraud and the detection method includes the horizontal financial analysis(Bala,
Labonté- LeMoyne, and Léger,, 2017).Vertical financial analysands, comparing the year to year
trends of the organisation, comparative ratio analysis.
The basic difference between the prevention and detection of the financial statements'
fraud is that the prevention of the fraud is to taking care of the major activities and role s which
are ned to be performed by the organisation in order to prevent their statements from any fraud
which may occur in their entity and this can be done by adopting some preventive measures
which helps the organisation in eliminating the risk of the financial statement's fraud(Taylor,
Bogdan, and DeVault., 2015). Whereas detection of the financial statements' fraud is to detecting
the cause and impact of the fraud in the organisation. Detection of the financial statements' fraud
can be done in many ways says comparing the organisation year trend or by comparing ratio
analysis.
Theme 2 Different ways for financial statements' fraud undertaking
There are different ways of undertaking the financial statements' fraud and one of them,
is the risk assessment procedure through which financial statement fraud can be undertaken. By
effectively evaluating and analysing the financial statement fraud company is able to identify the
risk which organisation might face and have direct impact on their long term profitability and
growth(Bala, Labonté- LeMoyne, and Léger,, 2017). By adopting the comparative ratio analysis
company can compare the difference between the statements and can identify the fraud so that
the effective measure can be taken in order to solve the problems.

Theme 3 The factors that hinder the use of the internal audits in financial statements' fraud
prevention and decision in Ghana
Internal audit refers to a system in which auditor reviews various activities of the
company and ensure their correctiveness. In Ghana, due to compliance of numerous laws and its
accounting standards, a business organisation needs to adopt internal audit system for prevention
of it from fraud and errors. As per the views of Cao, Chychyla and Stewart, (2015)It is essential
to involve internal audit control system in the financial statement preparation and maintenance so
that the financial statements of the company could provide transparent and accurate result of
company's business. In this regard, by adopting effective internal auditing system, a company
can ensure to maintain the financial statements of the company free from mistakes and prevent t
from the fraud as well.
Although, a business organisation faces range of hurdles while using internal auditing
system in the financial statement. For example, if a business organisation contains centralised
accounting department, chances of happening of fraud may enhanced. Further, here the internal
audit system may also gets failed, as it would enhance the probability of non exposing the
mistakes and fraud made by them. Further, as per Donelson, Ege and McInnis, (2016) in large
scaled organisation, as single duty is being divided into several parts, in case of happening of any
fraud or error in the financial statements, it becomes difficult to detect specific error in the fraud
and the employees responsible for the error or fraud as well, as each responsibilities have been
distributed towards various members of the firm.
Christensen, (2016) says that policies and policies adopted by an organisation can also
become and hinder in the internal auditing. If a business organisation fails to develop effective
strategies, plans and policies for financial statement preparation, the chances of happening of
fraud by a group of employees increases. Fraud made by a group is the most difficult task to be
detected and avoided as well. In this regard, it can also become a hurdle in the prevention of
financial statements from fraud. Moreover, according to Gaynor,( 2016), a small business
organisation due to shortage of funding and improper management system, does not pay a proper
attention in the internal control and audit system of it. In this order, mistakes and fraud made in
preparation of its various financial statements could not be detected.
In addition, as per the vies of Chambers and Odar,( 2015) the major hinder in the internal
control system can be the company's inefficient management system. Managers are the essential

part of a business control system. They are the major sources that can help the company in being
safe from the suspected factors like fraud and errors in the financial statements. In case, any
company's management is not effective or does not work for in favour of company's interest, it
results in not providing proper information to the internal auditors. It becomes a major hinder in
ensuring the financial statements to be free from the fraud and mistakes.
Furthermore, Abbott, (2016)says that skills and abilities of employees also influences the
performance of internal audit system with in an organisation. If a business employs unskilled
workers, it would result in enhancing mistakes in the financial statements. It would directly
affect the performance of internal audit system and would become a hinder in ensuring financial
statements to be free from any mistakes and fraud by enhancing their workings of detecting
errors as auditor would need to make an in depth analysis of the financial statements.
Theme 4 The practitioners opinions regarding the use of internal auditing in the prevention and
detection of the financial statement's fraud in Ghana
Amin and Mohamed, (2016)says that adoption of a proper internal audit system is the
best way to protect the company from fraud and errors of the financial statements. In the internal
auditing process a professional or group of professionals analyses and evaluates the financial
statements of the company. They analyse the compliance of each rules and regulations applicable
to it, adoption of each accounting standards, fundamental guidelines, etc. Analysis of all these
elements provides a sort of assuring no involvement of errors in the statements.
Further, Bentley-Goode, Newton and Thompson, (2017) says that it is a responsibility
of an auditor to detect fraud in the company and errors in preparation of financial statements as
well. An internal auditor first detects the risk of fraud, errors and mistakes involved in the
financial statement prepared by the company. As per the risk measurement they develop their
plans and procedure for the purpose of auditing the financial statements. In this order, probability
of detecting each error in financial statements becomes high.
In addition, as per the opinion of Newton (2015) , professional auditors of Ghana are
being provided special training for detection of fraud and errors. Therefore, being a professional,
an internal auditor can effectively detect the mistakes. Through in depth study of the mistakes,
screening of each employee having connectivity with the mistakes made, determining reason
behind the mistake, finding responsible employees for the mistakes, etc. internal auditor
effectively detect the fraud in the company.

Byrnes (2018) have an opinion that an internal auditor have intolerance nature towards
the fraud and responsible person behind the fraud. Auditor takes strict actions towards the
fraudsters. This behaviour of the auditor can prevent the business organisation from fraud and
errors in the financial statements. Moreover, according to the Klassen, Lisowsky and Mescall,
(2015), effective auditing system results in development of effective internal control system
within the business organisation.
When the company successfully develops internal control system, the chances of
happening mistakes and frauds within the business activities along with its financial statements
reduces and even can be eliminated as well. In this order, adoption of an effective internal
auditing system can prevent the company from frauds and errors of the financial statements.
RESEARCH METHODOLOGY
Research philosophy
Research philosophy consist of various parts such as pragmatism, positivism, realism and
interpretivism. It is the process through which the research will determine and differentiate the
entire research process. The pragmatism research philosophy accepts concepts which has been
relevant to support the action. Along with this, as per considering philosophies such as
positivism and interpretivism which are two extreme mutually exclusive paradigms regarding the
nature and sources of knowledge. There in this present report, research will use interpretivism
research philosophy.
Research approach
Research approach is being based on considering the three methods such as Deductive,
inductive and adductive approaches. In this research project research will use deductive research
approach to analyse the outcomes based on internal auditors for preventing the financial
statement fraudulently.
Research design
Research design consist of various method which are to be used in the process such as
qualitative and quantitative research design. However, in accordance with this research on which
researcher will use qualitative techniques for analysing the outcomes. The exploratory
observation would be effective and helpful in bringing the insight regarding a situation.

Data collection
In this part, there has been consideration of two parts such as primary and secondary
techniques of data collection in primary methods there will be consideration of questionnaires,
focus group analysis as well as interviews which directs the face to face conversation with the
respondent’s which have been selected. However, on the other side, as per ascertaining the
process of secondary data collection method on which there can be use of secondary sources
such as books, journals, articles as well as various studies which has been studied and analysed
to have adequate operational determination. However, in the present report, there have been use
of secondary sources of data collection on which researchers will analyse the details through
online sources.
Data analysis
The data that have been gathered through online sources which would be analysed as per
having the adequate ascertainment over the requirements stated in the firm. There have been
various techniques and measured which are to be articulated and ascertained to have effective
analysis over current market issues.
Ethical consideration
Research is based on considering all the ethics and relevant measured which are to be
considered. All the information has been gathered through different sources must be referenced
in the report. However, in the present report, there have been consideration of various sources of
finance which are being used and managed as per making a reliable analysis over the outcomes
adequately. Scholar will consider books, articles, journals as well as internet source which will
be referenced at the end of document.
Research limitations
In the present research there will be limitation relevant with the short time period for collection
of data as well as its analysis. Covering the objectives of the report, on which there have been
ascertainment of various operational practices which is based on making a reliable analysis in
research study.
CONCLUSION
From the above report it can be conclude that there are various reasons of which the
financial statements' fraud happen in the organisation either by the individual or entity. The

company can take actions to eliminate the risk of the fraud and this can be done by taking the
preventive measures.
The report also conclude the different way of detecting the financial statements' fraud
which through which organisation can detect the fraud and can take actions to solve the issue .
Above report also conclude the research design adopted and the methodology which is inclusive
of the data gathering process and different methods for empirical data analysis.

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