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        Accountancy, Faculty, Research

        Harbert professor’s research helps auditors better address fraud risks

        July 10, 2024 By Troy Turner

        All News


        Greg Jenkins, the Ingwersen Professor of Accountancy at Auburn University’s Harbert College of Business, continues to get national attention for his research into techniques that can help make it easier to detect fraud and thus save companies from expensive financial losses and other setbacks.

        Jenkins authored a report, “How auditors can apply a forensic-like approach to fraud,” that was recently published in the Journal of Accountancy, one of the nation’s most respected publications in the profession.

        Greg Jenkins headshot

        Greg Jenkins

        “Auditors are not trained as forensic specialists and an audit is not intended to be conducted like a forensic investigation,” said Jenkins. “However, auditors may benefit from using some of the techniques that forensic specialists deploy in their everyday work. Doing so may enhance auditors’ identification, assessment and response to fraud risks.”

        Jenkins’ current research examines various aspects of fraud and forensic matters, impediments to auditors’ use of emerging technologies, audits of less complex entities, auditors’ use of information technology specialists, deploying blockchain, non-fungible tokens (NFTs), and smart contracts to track and report greenhouse gas emissions, and potential changes to audit reporting transparency related to fraud and going concern.

        Recognizing the bad: fraud

        The dictionary defines fraud as “wrongful or criminal deception intended to result in financial or personal gain.” Not every accounting professional is an expert at finding it.

        “Research on fraud and forensics-related topics is important and relevant because of the significant negative impact that can occur when an organization is the victim of fraud,” Jenkins said. “Academic research in this area has the potential to help not only auditors, but organizations of all sizes and types also as they work to prevent and detect fraud.”

        A member of the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board (ASB), Jenkins interviewed more than two dozen professionals with forensic and fraud expertise. Here are some key tenets of a forensic-like perspective when considering the potential for fraud:

        • Accept that anyone can commit fraud. Anyone, including auditors, may be deceived by another person. Forensic professionals emphasize that fraud may be perpetrated by anyone regardless of their position, background, or personality traits.
        • Avoid overreliance on past practices (often referred to as the same-as-last-year approach) and checklists. Undertaking audits with the same mindset used in every previous audit or seeking answers only to check off predetermined criteria increases the likelihood that an auditor relies on what is readily available (i.e., availability bias) or information from familiar sources (i.e., familiarity bias). Forensic professionals eschew the easily available explanations, keep an open mind focused on digging deeper until a clear outcome is determined, and avoid a checklist-driven approach to their work.
        • Be curious. Although auditors provide information to clients who correct misstatements in the financial statements, auditors must be inquisitive and understand why a misstatement occurred. A misstatement may reveal deficiencies within a client’s internal controls or be indicative of more pervasive problems in the financial statements.
        • Follow a “show me” strategy. Though auditors routinely gather information through inquiry of management and others, forensic professionals highlight the importance of remaining professionally skeptical and obtaining supporting documentation that can corroborate or contradict a client’s explanations. The key to the “show me” strategy is following the audit trail and building documentation-based support behind a client’s explanation rather than auditing by inquiry alone.

        The value of research

        Research work published in respected journals helps promote a wider range of discussion in the field, Jenkins said.

        “The Journal of Accountancy is widely read by accounting professionals, and it regularly publishes articles on topics that are of great interest to members of the profession,” he said. “Broadly sharing insights from research and outreach efforts that are undertaken by the Auditing Standards Board (ASB) is an important aspect of communicating with the ASB’s stakeholders. The Journal of Accountancy is a natural vehicle for this communication.”

        He praised Auburn and Harbert for their support of such research.

        “Auburn University and the Harbert College of Business are tremendously supportive of research and outreach that advances knowledge and contributes to the economic health of Alabama and the nation,” Jenkins said. “My service on the ASB and my role in its research and outreach efforts are made possible because of the commitment that Auburn and the Harbert College have made to being a leading land-grant institution.”



        Jenkins research article, How auditors can apply a forensic-like approach to fraud,” was published June 1 in the Journal of Accountancy.