The Role of Independent Auditors and Audit Committees in Mitigating the Fraud Risks with Emphasis on the Reduction of In Consistencies between Financial and Non-Financial Measures

Abstract

This research aims to investigate the role of independent auditors and audit committees (AC) in mitigating the fraud risks. Prior studies have showed that all auditors or audit committees are not equally adept at identifying and reducing fraud risks by using non-financial measures (NFMs). This study’s research population covers the corporates listed on Tehran Security Exchange in 2014-2018. Hypotheses were tested using logistic regressions. Findings indicate some significantly negative relationships between auditor efforts, auditor tenure, AC chairs, auditor and AC chair expertise with fraud risks. Also, no significant relationship was found between expertise of AC chairs and fraud risk likelihood. The results indicate that audit processes can mitigate fraud risks, however, not all types of AC expertise can be helpful.

Keywords

• fraud risks
• auditor efforts
• auditor expertise
• audit committee (ac)
• chair expertise