THE IMPORTANCE OF THE FINANCIAL AUDIT IN PREVENTING ACCOUNTING ERRORS AND FRAUD

Abstract

In the audit of financial statements, the main objective of the auditor is to express an opinion on the accuracy of the reported information, in all significant aspects, in relation to the applicable accounting framework. Although international auditing standards state that auditors are not required to detect financial fraud in audited companies, they must ensure during their engagement that the risk of fraud will not affect the audit opinion. To detect the risk of fraud and reports of accounting manipulation, auditors can use several signal indicators. Practice and literature support that the use of indices to detect accounting manipulation can be achieved through various linear scoring functions including the Beneish Model (1999). In Romania, the problem of assessing the risk of audit fraud has not been adequately addressed, until now. The purpose of this scientific approach is to prevent, analyze and evaluate the risk of fraud, based on the estimated score function and the defined classification interval.

Keywords

• audit
• fraud
• beneish indices
• fraud risk
• prevention
• analysis
• assessment.