Athenaeum University

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Financial Reporting by Fraud - An Ongoing Challenge for Internal Auditors


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  1. Authors:
      • Emilia VASILE, PhD Prof., email:, Afiliation: „Athenaeum” University of Bucharest
      • Mariana MAN, PhD. Prof., email:, Afiliation: University of Petrosani Faculty of Sciences

      • 302|312

  2. Keywords: internal audit, internal control, fraud management, organizational environment, the risk of fraud, financial statements, accounting system.

  3. Abstract:
    Abstract\r\n\r\n In difficult economic times, such as the one we go through the risk of fraud\r\n\r\n increases mainly due to weak internal control, conjugated with uncontrolled\r\n\r\n access to the financial resources available to the entity.\r\n\r\n Opportunity to commit fraud perpetrator leaves allowed that can do this\r\n\r\n without being caught or identified, as well as the existence of incentives, which are\r\n\r\n mostly financial.\r\n\r\n Pressure is reflected by the financial needs of the offender; performance\r\n\r\n reporting superior results obtained; obtaining additional incentive or desire to\r\n\r\n achieve some professional aspirations as well. The risk of fraud increases and\r\n\r\n therefore the pressure on management to achieve the objectives and indicators set\r\n\r\n so that its position within the entity won’t be affected.\r\n\r\n The alarm signals are represented by limiting access to economic\r\n\r\n transactions carried out within the entity environment control inadequate,\r\n\r\n intimidation and inappropriate attitudes of the leadership; providing incomplete\r\n\r\n information; false documentation or lack of implementation of appropriate control\r\n\r\n measures.\r\n\r\n In these contexts, the internal auditors have the responsibility to reassess\r\n\r\n the risk of fraud and guide the activity for detecting the most common forms of\r\n\r\n fraud; to monitor and to evaluate the quality of managerial leadership; examine\r\n\r\n the functionality of the internal control system in place and propose measures for\r\n\r\n implementation of control devices to prevent or detect fraud and to correct and\r\n\r\n eliminate existing dysfunctions.\r\n

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