Investigating the black box of external audit practice: the paradox of auditors' failure in detecting and reporting fraud
通过对24位四大审计师访谈，揭示审计公司内部权力问题、客户施压以及伦理治理障碍如何导致审计师未能发现和报告欺诈，为政策制定者提供改革建议。
Purpose The study aims to explore the reasons behind external auditors' failure to detect and report fraud. Design/methodology/approach Semi-structured interviews were conducted with twenty-four experienced Big 4 auditors. Findings The present study reveals power issues within audit firms and how some dishonest audit partners deal with auditors' concerns at the higher echelons. It also shows how auditors are pressured and intimidated by audit clients when fraud-related issues are raised. Further, it sheds light on ethical, governance and regulatory issues inhibiting auditors’ ability to detect or report fraud. Research limitations/implications This study advances the audit literature by adding practice-based evidence on why external auditors fail to discover fraud. Practical implications The results draw policymakers' attention to the issues that inhibit external auditors' ability to discover fraud in practice which could help policymakers develop effective interventions. Additionally, it provides several recommendations which could aid policymakers and audit firms in designing effective audit reforms to resolve the fraud detection deficit. Originality/value This is the first study exploring external auditors' views on their failure to detect and report fraud and how the conflict of interests operates in the audit practice.