Abstract:
This paper reviews the experimental literature on fraud detection by external auditors. We conduct a systematic literature review that includes 37 experimental studies on fraud detection from the JSTOR, EBSCO, and WoS (Web of Science) databases and from SSRN. We present a theoretical background on fraud models and common fraud detection methods. Our review covers results of studies on fraud brainstorming and fraud risk assessment, on fraud detection from interviews, inquiries, text, and speech. We also reveal the outcome of studies focusing on the effect of attention, accountability, and the evaluation of audit evidence on fraud detection. These studies show that interventions like priming, and additional instructions on fraud consideration or game-like elements enhance auditor awareness of fraud cues, thus improving brainstorming, risk assessment, and the evaluation of audit evidence. Finally, the paper considers the limitations and criticisms of the presented studies, and future research avenues in fraud detection.
