Search Results (68)

This study aimed to examine the influence of red flag awareness and self-efficacy on the ability to detect fraud through professional skepticism. This study was conducted on commercial banks in Indonesia, due to the high level of fraud that occurs in the banking sector. This study used a quantitative method, and data were obtained from the results of a survey that distributed questionnaires to all internal auditors of commercial banks in Indonesia. The analysis tool used in this study was Smart PLS. The results show that red flag awareness and self-efficacy has an influence on the ability to detect fraud directly or through professional skepticism. This research contributes to bank managers and regulators improvement of the quality of internal auditor training, as well as strengthening the fraud detection system through the development of professional skepticism. Full article

This paper examines the uptake of AI-driven fraud detection systems among financial institutions in the UAE and Qatar, with a special focus on trust, transparency, and perceptions of fairness. Despite the promise of AI operations in identifying financial anomalies, unclear decision-making processes and algorithmic bias constrain its extensive acceptance, especially in regulation-driven banking sectors. This study uses a quantitative strategy based on Partial Least Squares Structural Equation Modeling (PLS-SEM) and Multi-Group Analysis (MGA) of survey responses from 409 bank professionals, such as auditors and compliance officers. This study shows that transparency greatly enhances trust, which is the leading predictor of AI uptake. Fairness perception mediates the negative impacts of algorithmic bias, emphasizing its important role in establishing system credibility. The analysis of subgroups shows differential regional and professional variations in trust and fairness sensitivity, where internal auditors and highly AI-exposed subjects are found to exhibit higher adoption preparedness. Compliance with regulations also emerges as a positive enabler of adoption. This paper concludes with suggestions for practical implementation by banks, developers, and regulators to align AI deployment with ethical and regulatory aspirations. It recommends transparent, explainable, and fairness-sensitive AI tools as essential for promoting adoption in regulation-driven sectors. The findings provide a guide for promoting responsible, trust-driven AI implementation in fraud detection. Full article

This study indicates that internal auditors need to fully adopt CAATs to improve the efficiency of auditing tasks. This paper investigates the determinants influencing CAAT adoption among internal auditors in Jordanian firms. This study investigates the roles of performance expectancy, effort expectancy, social influence, and facilitating conditions on the adoption of CAATs. Also, this study investigates the moderating variable of auditor experience. The data were collected using a survey that was sent to 420 internal auditors in auditing firms in Jordan. A total of 291 responses were collected, of which 279 proved to be valid for study. This study found that the adoption of CAATs is influenced by performance expectancy, facilitating conditions, social influence, and auditor experience. Conversely, effort expectancy has no influence. Furthermore, auditor experience moderates the relationship between performance expectancy and facilitating conditions for CAAT adoption. This study found that auditor experience does not moderate the relationship between effort expectancy or social influence and CAATs in auditing firms in Jordan. Full article

Corruption in public procurement remains a challenge to good governance, especially in developing nations. Blockchain technology has been espoused as a new paradigm for achieving sustainable public procurement practices for effective service delivery and, by extension, promoting sustainable development. Given the potential of blockchain technology, its implementation has been slow in developing countries. Additionally, there is an inadequate decision support framework to prioritize corruption-prone stages of the public procurement cycle for strategic blockchain integration at the most critical corruption-prone stages of the public procurement cycle given the scarce resources available in developing countries. Therefore, we employed a matured theory that is the principal-agent theory to identify key agency problems related to public procurement in developing countries. An interview with 25 experts and a thorough review of Ghana’s Auditor General produced seven public procurement cycle stages. Further, a survey was designed for experts and stakeholders to prioritize the identified procurement stages under the agency problems through the Analytic Hierarchy Process (AHP). Our results revealed that tender evaluation was the most critical stage susceptible to corruption, followed by contract management and procurement planning in the public procurement stages. Additionally, for the relative importance of the criteria, information asymmetry was ranked first, followed by moral hazard, and then adverse selection. This study offers a targeted framework for blockchain deployment in public procurement from an African country perspective. The outcome of this study provides insights for policymakers and procurement practitioners to know the most critical stages of public procurement stages and leverage blockchain technology given the scarcity of resources in developing countries to aid sustainable public procurement. The proposed blockchain framework can enhance service delivery, citizens’ trust, and international donor confidence in partnership and funding for public procurement projects in developing countries. Full article

In Greece, Local Government Organizations (LGOs) are under the responsibility of the General Government. Before the COVID-19 pandemic, in the above-mentioned organizations, internal audit was exercised following Law 4270/2014 (Article 168). Overall guidance and supervision were provided by the General Accounting Office. However, the number of municipalities and regions that established internal audit departments was very low. According to the post-COVID-19 Law 4795/2021, internal audit is now mandatory. The pros and cons of the new legal system compared to the old one are highlighted in this study through interviews with financial officers, elected officials, and internal auditors. Full article

PURPOSE—This article reviews some theories and concepts of public management, including those related to public value, opportunity costs and efficiency, in order to analyze the advantages and disadvantages of using Internal Audit in public organizations. METHODOLOGY—Utilizing the literature review as the main tool, this paper draws from various sources presenting the current developments of audit around the public sector from a variety of countries and using information technology as a factor of effectiveness. RESULTS—In Greece, reforms in public administration started after the financial crisis, with Law 4795/2021 strengthening the evaluation systems. Evaluation in Greece is carried out by supervisors, while auditing is carried out by internal auditors with no link between the results. A hybrid audit is proposed for the more effective evaluation of public administration, combining evaluation and audit. These changes aim at greater transparency, security and accuracy in the management of public organizations. ORIGINALITY/VALUE—This study provides a literature review on public sector internal control. In addition, it develops insights, critical reflections and avenues for future research in this area. Full article

This study examines the feasibility of using financial ratios and non-financial variables to predict audit opinions (qualified or unqualified) for firms listed on the Athens Exchange (ATHEX) from 2018 to 2022. Using 450 firm-year observations from 90 non-financial firms, we applied a logit regression model to analyze the relationship between 11 financial ratios and non-financial factors, such as auditor quality, auditor turnover, and corporate performance. While the results indicate that auditor characteristics, particularly auditor quality, have significant explanatory power, the predictive strength of financial ratios varies, suggesting that audit opinions in Greece may be influenced by broader governance and institutional factors rather than financial indicators alone. The study provides empirical insights that contribute to the development of predictive models for audit opinion assessment. These findings are particularly relevant in emerging economies like Greece, where audit risk and firm failures are heightened due to economic and regulatory challenges. By identifying key determinants of audit opinions, the study enhances understanding of audit risk assessment and its alignment with International Standards on Auditing (ISA 520). However, its findings are limited by the sample size and Greece’s unique regulatory environment. Future research should explore the integration of additional governance and institutional variables and assess the model’s applicability in larger and more developed markets. Full article

In the era of increasing digitalisation, organisations face the critical challenge of detecting anomalies in large volumes of data, which may indicate suspicious activities. To address this challenge, audit engagements are conducted regularly, and internal auditors and purchasing specialists seek innovative methods to streamline these processes. This study introduces a methodology to prioritise the investigation of anomalies identified in two large real-world purchase datasets. The primary objective is to enhance the effectiveness of companies’ control efforts and improve the efficiency of anomaly detection tasks. The approach begins with a comprehensive exploratory data analysis, followed by the application of unsupervised machine learning techniques to identify anomalies. A univariate analysis is performed using the z-Score index and the DBSCAN algorithm, while multivariate analysis employs k-Means clustering and Isolation Forest algorithms. Additionally, the Silhouette index is used to evaluate the quality of the clustering, ensuring each method produces a prioritised list of candidate transactions for further review. To refine this process, an ensemble prioritisation framework is developed, integrating multiple methods. Furthermore, explainability tools such as SHAP are utilised to provide actionable insights and support specialists in interpreting the results. This methodology aims to empower organisations to detect anomalies more effectively and streamline the audit process. Full article

In 2006, the PCAOB implemented new restrictions on the auditor provision of some tax and contingent fee services provided to issuer audit clients. These restrictions were implemented to reduce auditor conflicts of interest inherent when the auditor provides any of these specific services and a financial statement audit. Subsequent research found that these tax service restrictions did not impact audit quality, measured as the probabilities of going concern opinions or financial statement restatements. We reexamine this research question in the context of the regulation’s earnings management effects. Our investigation of this question uses a difference-in-difference regression approach and 20,043 issuer company fiscal year observations from 2002 to 2009, consistent with that used in prior studies, and four measures of earnings management (discretionary accruals, abnormal working capital accruals, current accruals, and the likelihood of meeting or slightly beating the zero earnings change benchmark) to proxy for audit quality. We find, consistent with findings in prior studies, no detectable effects of the 2006 PCAOB tax service restrictions. These null results persist through a series of robustness tests that include re-estimating our primary regressions on a Big 4 subsample, adding multiple alternative treatment variable definitions, generating a propensity-score-matched sample, and adding a control for internal control weakness. These findings raise further doubt about the need for these non-audit service restrictions. Full article

This study aims to describe and assess the impact of critical infrastructure (CI) cybersecurity issues on the sustainable development of smart cities. This study highlights the integration of PayTech systems into the broader CI landscape, highlighting their impact on maintaining economic stability and ensuring the smooth operation of city services. Key companies within smart regions, particularly those operating in the payment industries, are essential to maintaining the functionality of critical services. These companies facilitate the processing of services provided to citizens, enabling access to vital municipal services. As key players in the PayTech and online e-commerce sectors, they form a crucial part of modern critical infrastructure, operating within an ever-evolving digital environment. This study examines the recovery processes employed after cyberattacks, focusing on the differing perspectives of internal and external professionals. It identifies significant differences in the perceptions of recovery strategies among internal stakeholders, such as investor relations (IR) teams, reputation management (RM) experts, and Chief Information Security Officers (CISOs), who represent critical infrastructure companies. Additionally, it explores the roles of external auditors, who provide impartial emergency support and perform specialized recovery tasks. Importantly, this study underscores the current attitudes toward future information security strategies and their influence on the financial recovery and reputation of reliable companies following cyber incidents. This research contributes to the existing knowledge by shedding light on the perspectives of both a company’s internal and external specialists involved in the recovery process and cyber resilience strategies in critical infrastructure sectors. Full article

Legislative regulations have recognized the significance of board independence in enhancing the board’s role and strengthening its autonomy, which are among the key features that mitigate conflicts of interest between management and shareholders. External auditing serves as a pivotal element of corporate governance, acting as a monitoring mechanism to reduce information asymmetry and safeguard principal interests by ensuring the accuracy and fairness of financial statements. This, in turn, reassures data users and stakeholders. The study aimed to examine the effect of board independence on enhancing external auditor independence among 72 Jordanian service companies listed on the Amman Stock Exchange from 2017 to 2021, with a study sample of 62 companies. The findings revealed a negative impact of board member independence on external auditor independence, as measured by audit firm size. However, company size positively influenced external auditor independence, while no effect was found for financial leverage or company age. The findings highlight the need for companies to strengthen internal controls and governance practices to enhance external auditor independence. Additionally, they suggest that company size plays a crucial role, while other factors like financial leverage and company age may have limited impact, indicating areas for further exploration in future research. Full article

The significance of internal auditing and its quality cannot be overstated, making it essential to investigate the factors influencing this quality. This study, employing a cross-sectional analysis, aims to assess how the characteristics of external auditors affect the perceived quality of internal audits in Iranian and Iraqi banks. In 2024, data regarding the attributes of external auditors and the perceived quality of internal audits were collected through a questionnaire distributed to external auditors from various banks in Iran and Iraq. The data analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). The study reveals a positive relationship between external auditors’ competence and independence and the perceived quality of internal audits, while it shows a negative impact of external audit methodologies on this perceived quality. These findings highlight the importance of external auditors’ independence as a key determinant of perceived internal audit quality. Full article

This study examines the factors influencing tax decision-making from the perspectives of income and sales auditors in Jordan. It explores how internal and external factors shape auditing processes and compliance. Using a sample of 215 tax auditors from 2018 to 2022, this study adopts a quantitative methodology and collects data through structured surveys. The findings highlight key variables such as auditor independence, professional experience, and taxpayer knowledge as significant factors influencing tax decisions. The study recommends enhancing auditor training, fostering independence, and improving taxpayer education to promote transparency and fairness in tax systems. Full article

Purpose: the purpose of this study is to investigate whether corporate governance mechanisms and attributes influence the sustainability performance of companies included in the BIST 50 Index. Results and contributions: Regression analysis showed that there was a significant positive influence of board tenure on sustainability performance and all its types; board size on environmental performance; and a dummy variable for board evaluation externally facilitated and company size on sustainability, environmental, and social performance. A significant negative impact of director attendance at board meetings on social performance was also revealed. This study contributes to the literature on the role of corporate governance in achieving the SDGs for BIST 50 Index companies, highlighting the significant impact of its individual indicators on the achievement of sustainability performance. Methodology: The authors reviewed 45 sustainability reports of BIST 50 Index companies for 2023. Four indices—Sustainability Performance, Environmental Performance, Social Performance, and Corporate Governance Performance Indexes—were developed to characterize sustainability performance and its types based on a content analysis of sustainability disclosures. To analyze the influence of mechanisms and characteristics of the corporate governance system on sustainability performance, eight independent variables were used: board size, number of board meetings, director attendance at board meetings, board independence, board tenure, a dummy variable for board evaluation externally facilitated, a dummy variable for internal auditors present, and a dummy variable for CEO and Chair functions combined. Two control variables, company size and leverage, were used as well. Gap: Today, the scientific literature has no universal approach and understanding of how the corporate governance system should be developed to improve sustainability performance or its individual components. Relevance: Development of a corporate governance system is one of the ways to increase the level of sustainability performance of companies. Impact: The results of the study made it possible to produce several recommendations (expand the number of board members, develop an effective procedure for regular changes of general directors in company boards, introduce independent external control tools in the corporate governance systems of companies) that will lead to the achievement of SDGs 5, 8, 16. Full article

Multidimensional enterprise performance characteristics (enterprise operational data, financial transactions records) are stored in the company’s database (warehouse), and their volume and variety are huge. Financial transaction data are directly and indirectly related to value chain processes, various physical objects of activity, and their attributes. There are data mining (DM) and process mining (PM) methods for analyzing enterprise operational data and identifying deficiencies in business process management. There is a need to find new user experience (UX)-driven methods for user interface with the specification of DM and PM tools on the level of business process management concepts. The paper presents the UX design-based approach to designing the user interface (UI) of process mining and data mining systems and is based on a conceptual semantic model named financial data space (FDS). The peculiarity of FDS is that it can include the characteristics of financial data and other UX-related characteristics (events, environmental and internal changes, business location) that may have an impact on changes in the values of financial objects (FO). The presented multidimensional financial data model helps increase the possibility of uncovering management weaknesses by identifying anomalies in large amounts of financial data. The prototypes of components of the financial data analysis system are described and developed using the process mining tool. The presented method of a multidimensional representation of financial data and transformation into a PM project is a user-friendly solution that allows to increase the analytical capabilities of the auditor’s work with large amounts of data, providing a more flexible view of the financial indicators of the company’s activity. Full article