Fraud Risk Assessment and Detection of Fraud: The Moderating Effect of Personality

Nahariah Jaffar, Hasnah Haron, Takiah Mohd Iskandar, Arfah Salleh

Abstract


External auditors are required by the auditing standards to provide reasonable assurance that the financial
statements are free from material misstatements. Inability of the external auditors to detect material
misstatements, particularly fraud, may expose the external auditors to litigation. The present study aims to
examine the moderating effect of personality factors (that are neuroticism, extraversion, conscientiousness,
openness to experience and agreeableness) on the relationship between the external auditors’ ability to assess
fraud risk and their ability to detect the likelihood of fraud. The present study utilizes an experimental approach
by sending case materials to audit partners or audit managers attached to auditing firms operating in Malaysia.
The result, however, shows that none of the personality factors has moderating effect on the relationship between
the external auditors’ ability to assess fraud risk and their ability to detect the likelihood of fraud.


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International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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