SUMMARY:The purpose of the current study is to examine the responsibility of external auditors in relation to corporate corruption and to highlight the implications of this for external audit regulators. The current study is based on a critical review of prior academic literature as well as a thorough examination of both the International and American Auditing Standards relating to fraud and illegal acts. External auditors have a responsibility for assessing corruption risks but their role was not clearly defined by external audit regulators. The current study was the first to clarify the responsibility of external auditors with regards to corporate corruption, and to shed light on current limitations in the audit standards related to this area. The current study also offers recommendations to audit regulators, external auditors, audit firms, and researchers on such controversial area.

The aim of this paper is to increase external auditors’ knowledge about earnings management and help them spot the difference between earnings management and financial reporting fraud. A thorough literature review was undertaken to achieve the paper’s aim. The secondary data used in this paper was obtained from different databases like Ebscohost, Business Search Premier, Academic Search Premier, Emerlad, Sciencedirect, and Jstor. The current paper suggests a new approach and way of thinking for external auditors that might help them in spotting the difference between earnings management and fraud. This new approach calls for the importance of considering management’s motives which is the main driver for all fraudulent activities. A set of recommendations for external auditors, researchers, and standards’ setters are provided in this paper. External auditors have to view external auditing in terms of the audit of motivations. Standards’ setters should provide external auditors with more guidelines regarding the audit of management’s motives. More research is still needed in management’s motives and integrity.

Purpose This paper aims to explore the perceptions of external auditors’ on the motivations behind management fraud, which could increase the likelihood of detecting financial reporting fraud. Design methodology/approach Mixed research methods, namely, an online questionnaire and semi-structured interviews, were used for data collection from external auditors in Egypt. Findings The findings revealed that the desire to get remuneration or bonuses and the need to secure financing are the most common motivations behind management fraud in Egypt. The current study also found other motivations behind management fraud that could be more specific to the Egyptian context. Research limitations/implications Gaining access to small- and medium-size audit firms, in particular, was very difficult. This study did not use factor analysis to determine whether differences exist among the motives/factors, which should be the focus of future studies. Practical implications This study was the first to provide empirical evidence on the motivations behind management fraud in the context of a developing nation such as Egypt. The findings of this study could be important for Egyptian regulators and external auditors who wish to reduce fraud risks in their own country. The findings could also help external auditors across the globe in recognising the signs that can trigger management motivations to engage in financial reporting fraud, which in turn could increase the likelihood of detecting financial reporting fraud. Originality/value This study was the first to provide empirical evidence on the motivations behind management fraud in the context of a developing nation such as Egypt. The findings of this study could be important for Egyptian regulators and external auditors who wish to reduce fraud risks in their own country. The findings could also help external auditors across the globe in recognising the signs that can trigger management motivations to engage in financial reporting fraud, which in turn could increase the likelihood of detecting financial reporting fraud.

Fraud is a major concern for investors, regulators, and external auditors. Of particular concern is asset misappropriation because it was given less attention in prior audit literature as well as the audit practice though it is the most common type of occupational fraud. This motivated the current study to examine areas related to asset misappropriation that had never been examined before and alert external auditors in Egypt to a type of fraud which was given less attention. The current study also proposed a framework for external auditors that might help them properly assess and respond to fraud risk factors arising from asset misappropriation. This framework was designed after careful consideration of prior audit literature, Egyptian auditors' perceptions of the most important red flags of asset misappropriation, and their experience on the most effective fraud risk response. Study data was gathered using prior literature, a questionnaire, and a semi-structured interview.

SUMMARY Recent corporate scandals have raised concerns about the quality and value of the audit profession and have generated demands for improving auditors' evaluation of management integrity. The literature lacks evidence regarding methods of assessing management integrity, while audit standards provide little if any guidance on this matter. This raises questions about how external auditors can comply with the audit standards in this area and what best practices and deficiencies exist in the assessment of management integrity. This study examines methods of assessing management integrity by providing insights from the Big 4 auditors in Egypt. The findings of this study will benefit audit firms in their professional audit training programs, as well as auditors conducting fraud risk assessments.