Auditor Responsibility And Fraud Detection In Ethiopian Private Audit Firms

This study examines the roles and responsibilities of external auditors in fraud detectionrnin Ethiopia including the factors that influence external auditors' responsibility andrnexpert performance in detecting fraud. The study adopts a mixed methods researchrnapproach by combining data gathering instruments of research questions, in-depthrninterviews and document analysis.rnThe questionnaire data were analyzed usingrndescriptive statistics, correlations, and logistic regression analysis and data fromrninterview and document reviews were interpreted qualitatively . The findings of the studyrnshow that, auditors are responsible for detection and uncovering fraud, and are legally liablernfor subsequently discovered misstatement in audited financial statements. Reportingrnintentions of an auditor to the concerned body depends upon the type of fraudulent actrnbasically if it is investigative audit than financial statement audit. Fraud, in general, wasrnnot perceived to be a major problem in Ethiopian. Unwillingness to look for fraud because ofrnfear of spoiling good relationship with clients, too much trust placed on the auditees,rnmanagement and employees, auditor not giving enough emphasis to audit quality,rnmanagement not having fraud policy; and, failure to focus on high-risk fraud areas .rnFraudsters collusion, Absence of clear interpretation of tax law /proclamation, absencernof well-organized professional body in Ethiopia are listed among the most importantrnchallenges of auditors fail to detect fraud. The study also finds that the five variablesrnwhich are certification, practical experience, training, audit fee, and independencernsignificantly influence the auditor’s expert performance to fraud detection.rnThe study suggests that Auditors need to “audit smarter which can be accomplished byrnthe need for auditors to be more aware in context which the audit occurs and the fact thatrnthe nature and concentration of fraud varies by industry and auditors should be aware ofrnthe development of their profession

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