ISSUED: 9 March 2017
MEDIA CONTACT: Valerie Owens
SHEPHERDSTOWN, WV — The next Shepherd University Faculty Research Forum, “The Effects of the Presence of Fraud and Auditor Certification Considering Professional Skepticism on Fraud Risk Assessment Performance,” will take place on Tuesday, March 21, from noon-1 p.m. in the Robert C. Byrd Center for Congressional History and Education auditorium. The event is free and open to the public.
Cindy Vance, who is an assistant professor of accounting and a licensed certified public accountant, will discuss the results of a study she conducted for her doctoral dissertation to determine whether auditors who are Certified Fraud Examiners are more effective at conducting a fraud risk assessment on a company’s financial statements than auditors with only the Certified Public Accountant credential. The participants’ level of professional skepticism was taken into consideration for the experiment.
A fraud risk assessment, which all public companies must conduct, is a pre-audit step that measures whether the risk of fraud is high, medium, or low. Fraud is the intent to deceive by manipulating financial data.
“The reason companies would do this is because the investors are expecting a certain bottom line or to keep the market price high,” Vance said. “When financial statement fraud happens companies are manipulating the bottom line and if the company is really not doing well then it would go bankrupt, the shareholders could lose their money, and the employees could lose their jobs and retirement.”
Vance cites two examples from 2001 and 2002 where this happened—the collapse of the energy company Enron and of telecommunications company WorldCom.
“After the fraud happened in the early 2000s, Congress passed the Sarbanes-Oxley Act of 2002 (SOX); however, fraud is still occurring,” Vance said. “My topic has to do with whether the auditors are able to detect the fraud early enough to stop it before something bad happens.”
Vance said it took seven months to gather all the data she needed to answer the following research questions: Does the presence of fraud risk have an effect on fraud risk assessment performance? Does a certification in fraud knowledge have an effect on fraud risk assessment performance? Does professional skepticism influence fraud risk assessment performance?
“Hopefully those who come to the lecture will understand there is an issue, that it’s a complex issue, and it’s not something that can easily be fixed, which is why we still have as much fraud as we do,” Vance said.
Listen to the interview HERE.
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