Auditing is the deposition and evaluation of facts about information to find out and survey on the degree of correspondence between the information and founded standards. Auditing should be achieved by a reliable, independent get together and connect the results to interested users. (Elder, and more, 2007, p. 4) The goal of audit is to allow the auditor expressing an opinion if the financial claims present a genuine and good view in accordance with the identified financial reporting platform, and will enhance the reliability of financial assertions. Audits can improve a company's efficiency and profitability by supporting the management better understand their own work and financial system. The management, as well as the shareholders, suppliers and financers, is guaranteed that the risks in the organization are well-studied, and effective systems are in place to deal with them. Furthermore, audit can identify areas within an organization's financial framework that require improvement, and the way to implement the proper changes and changes. It uncovers inaccuracies and discrepancies within an organization's records, which might be indications of poor financial organization or even inner fraud, and decrease the risks. (Auditing, n. d. )
At present corporate and business scandals and fraudulence is still a pervasive problem and is also very common around the world. However these scandals and fraud are so large that whenever many people especially employees of the company lose their careers and shareholders are bearing from major loss in these incidents.
Corporate scam is any scams committed against a small business and is utilized to include a number of wrongs that might occur inside a business. Corporate scams takes many forms, including insider trading, embezzlement, false billing plans, securities fraudulence and forgery, Advantage misappropriation fraud, Business opportunity fraud, Employment scam, Short and long organization fraud, Employee scam etc. Being among the most dangerous kinds of corporate fraud is known as long firm scams, which occurs when a business is founded on genuine grounds, and then lead by certain unethical individuals toward a purpose of defrauding over a long time. (Corporate fraud, n. d. ) It really is difficult to anticipate such scandals prior to the visibility as these require complex options for misusing cash, overstating earnings, understating expenditures, etc. Matching to studies conducted in the United States, United Kingdom and Australia (2010) says that corporate fraudulence increased in the previous twelve months and financial conditions have worsened. The studies also found that the buck amount lost to fraudulence also experienced increased as well. The analysis conducted by Connection of Certified Fraudulence Examiners (ACFE, 2009) approximated that scams cost U. S organizations 7 percent of total annual profits, or $ 994 billion in losses based on 2008 gross home product. Although financial statement fraud less frequent, nonetheless it typically included more than $ 2 million. Together, in britain KPMG's Scams Barometer found 1. 3 billion of scam in '09 2009. National head of forensic Gary Gill (2010) says that 2009 Australia KPMG's Fraud Barometer found million in major scams cases. Plus they outlined that although the amount of cases stay same compared to first to second half 2009, the value or cost of the scam doubled. This could weaken investors and shareholders self confidence.
In order to prevent or reduce from corporate and business fraudulence auditors do have a work to detect problems and fraud hence auditors need to ensure that the financial claims are presented in true and fair view relative to the determined financial reporting construction. This research will assist the auditors to find out what they could be done or what would be their responsibility to lessen the massive corporate scam which, is speedily spreading across the world.
Auditors get yourself a reasonable guarantee that financial statements are free from material misstatement triggered by error or fraud. Among the challenges encountered by the auditor in detecting scams is the independence of the auditor. Some companies' management will not permit the auditor to do something with integrity and exercise objectivity and professional skepticism. The other concern experienced by the auditor would be that the management will not provide sufficient information to detect the fraud. The auditors would not get enough helping documents to demonstrate that if the transactions are appropriately recorded. Maintaining open public trust is also one of the problems that auditors would face, hence the general public has brought up the question as to whether audit functions can be respected, after financial record fraud determined by big companies such as Enron, Tyco, and World. com. In order to prevent such problems from developing, this research has been conducted to be able to help auditors to improve audit quality, prevent and detect potential scam before it is too overdue.
Andrew Marshal (2009) said that when it involves corporate fraudulence, nowhere is safe, hence there are scam scandals occurring everywhere in the world. CPA Journal (2008) predicted that a typical organization loses 5 percent of its gross annual revenues to scams, or about $ 4, 500 per staff each year. Furthermore the CPA Journal (2008) expresses that most frauds involve a lack of adequate internal settings (opportunity), the need to maintain an expensive lifestyle or pressure to meet goals (incentive), and the perpetrators' insufficient understanding that their activities are incorrect (self-rationalization) or simple insufficient integrity. However, investors expect auditors to provide them absolute confidence for detecting materials misstatement due to fraud. Nearly all shareholders want from an audit complete assurance the financial assertions are free of all types of material misstatement. The primary objective or the purpose of this research will be on how and what exactly are the techniques that auditors can donate to minimize materials misstatements from financial assertions and reduce corporate scam. The other objective of the research is to recognize the difficulties in detecting corporate fraud and exactly how to improve audit quality. Besides that this research will evaluate the gaps in internal controls and exactly how auditors can come out with a financial record without the biasness.
The scope of the study will focus on auditors and their tasks towards the general public. In addition it will focus on scams awareness, fraud risk and the organization governance in the business. Furthermore this study will give attention to the skills and the knowledge which auditors should have to perform their obligations.
The limitations of this research will be the difficulty in collecting principal data; hence this research will be conducted with face-to-face organised interviews and a review questionnaire. Enough time limit for the interview may not be enough predicated on the option of the individuals, therefore interview must be scheduled for the availability of participants.
This research will accomplish the auditors to maintain public trust and can boost audit quality. By enhancing audit quality auditors can reduce the corporate fraudulence and make the companies trusted. When audit quality is improved auditors will be more responsible in detecting and preventing scams. And auditors will perform their work more carefully as a result the companies won't experience financial trouble or issues. This research will gather information about how precisely corporate frauds can be reduced and auditors as a key people who needs these details to be employed in the corporate world to lessen corporate scam.
This project will not require any principles, theories or models to be utilized along the way to do it.
(i. e. books - what exactly are the titles of books you are going to read / data collections you will use)
The books that this research use are Audit and Assurance Books, Internal and Exterior Auditing books. Newspapers, online articles and publications which are related to commercial fraudulence and auditors will be used. Journals include such as Audit disaster futures: antidotes for the expectation space by Fran M. Wolf, Adam A. Tackett and Gregory A. Claypool. And CPA journals such as Auditors tasks with respect to fraudulence: a possible transfer. Furthermore this research use the Audit firm's reports such as KPMG.
Other relevant sources include:
http://www. reuters. com/article/idUSTRE5AJ03S20091120
http://www. reuters. com/article/idUSN1717856320100317
http://www. bobsguide. com/guide/news/2009/Nov/20/Corporate_accounting_fraud_increasing_around_the_world. html
http://www. kpmg. com/AU/en/IssuesAndInsights/ArticlesPublications/Press-Releases/Pages/Press-release-fraud-doubles-16-Feb-10. aspx
http://www. irs. gov/compliance/enforcement/article/0, , id=213768, 00. html
http://www. anonymousemployee. com/csssite/sidelinks/corporate_fraud. php
http://www. procurement. travel/news. php?cid=corporate-fraud-rises-employees-layoffs-economy. Mar-10. 31
http://www. emeraldinsight. com/journals. htm?articleid=868441&show=html
The data for this research is intended to be covered from Malaysia. Primary data will be collected from stated companies and Audit firms of Malaysia. Data will be gathered with the help of questionnaires and interviews. Face-to-face structured interviews will be carried out. The interview will be retained short to value the time constrains of the participants, hence would not be exceeding thirty minutes. Where clarification is required, further follow-up interviews can be executed over telephone or e-mail where necessary.
A total of 150 questionnaires would be prepared and distributed to the employees of listed companies of Malaysia and Certified Consumer Accountants (CPA) of Malaysia. The questionnaire would also be allocated to the shareholders for the placed companies of Malaysia and other employees who will work in financial institutions as well. The questionnaires would be more closed ended organized while there would be some wide open finished questions included as well. A lot of the supplementary data will be taken from online journals, Emerald, other websites and Athens repository.
This research would gain the Audit businesses, general public and private limited companies and shareholders and stakeholders of the public companies. This research not only benefits to Audit firms, general public and private companies, but also for the public as a whole. The hypothesis testing would show the effect and the changes of audit quality. This hypothesis screening would be the partnership between internal auditors and the exterior auditors, being independent between the inside auditors would assist the external auditors to work individually and detect fraudulence and stop them re-occurring. In addition this research would expect that there is a relationship between interior control and the audit quality and romantic relationship between audit ethics and audit types of procedures that the exterior auditors carried out.
The final result of this research would provide empirical information to all auditors and the top management of the business. Especially this information would help the directors to come out with reliable financial statement to its users. This research provides theoretical information to all the directors also to the management of the business in order to prevent the financial statements from misstatement and scams. These details helps the company from losing billions of dollars per year from corporate scams and will guard the shareholders interest and the stake holders of the business.
All the accounting and financial companies will benefit from this research. As an audit organization this research will help both boosting the audit quality and can aid the new methods to detect fraud and will encourage new audit firms to perform the audit with anticipated health care. Auditing is one of the challenging works which assist the auditors to work with their knowledge and experience and at the same time the new auditors will learn and gain experience in the audit field and would learn new methods on detecting frauds. This research would profit all the organizations to minimize their corporate fraudulence cost.
This research is immediately related to Audit and Guarantee, Forensic Accounting. And also somehow this research relates to commercial governance as well.