Behavioral Research in Accounting · 2001 · 114 citations · 11 references
Fraud DetectionAuditingContinuous AuditingSas NoRelative ImportanceAccountingRisk ManagementFraud Risk ManagementManagementBusinessRed FlagsDecision AnalysisLoss PreventionAccounting AuditFinancial Crime
The study explores how 140 auditors rate the relative importance of 25 risk‑factor red flags identified in SAS No. 82. Analytic Hierarchy Process (AHP) was used to generate decision models for each auditor and aggregate mean models for auditor groups. Management characteristics and control‑environment influence red flags were about twice as important as operating and financial stability red flags and four times as important as industry‑condition red flags, with the top three red flags accounting for roughly 40 % of total.
In an exploratory study, we report how 140 auditors rate the relative importance of 25 risk factors (red flags) identified in SAS No. 82. The Analytic Hierarchy Process (AHP) is used to produce a decision model for each subject, and mean decision models are reported for groups of subjects. The results indicate that management characteristics and influence over the control environment red flags were approximately twice as important as operating and financial stability characteristics red flags and about four times as important as industry conditions red flags. The three single most important red flags account for almost 40 percent of the total decision weight. A particularly interesting finding is that the mean decision models of 43 Big 5 auditors, 50 regional/localfirm auditors, and 47 internal auditors were not significantly different from each other.
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