Business busts and U.S. auditors' interest in fraud detection: Evidence from the 20th century

We find evidence that U.S. auditors increased their attention to fraud detection during or immediately after the economic contractions of the 20th century, based on a content analysis of the 12 volumes of the 20th-century auditing reference series Montgomery’s Auditing. Contractions, however, do not seem to have affected auditors’ attention to the formal goal of fraud detection. The study suggests that auditors’ aversion to the heightened risks of fraud during economic downturns leads them to focus more on fraud detection at those times regardless of the particular guidance in formal audit standards. This study is the first to find some evidence of a recession-influenced difference between fraud detection practices and formal fraud detection goals.

The ethics of professional accountants: An Aristotelian perspective

Purpose The purpose of this paper is to examine how Aristotle’s ethics can be applied to the ethics of professional accountants, in relation to the approach adopted by the International Federation of Accountants (IFAC), and to consider the reasons that justify the Aristotelian approach. Design/methodology/approach The paper outlines IFAC’s approach and identifies several weaknesses. Three themes of Aristotle’s Nicomachean Ethics are applied to the work of professional accountants. Reasons why this perspective is more suitable for professional accountants are then articulated. Findings Several aspects of Aristotle’s ethics can be fruitfully applied to the ethics of professional accountants. These include the relationship between function, goals and the good, an awareness of the human goal to achieve eudaimonia, the development of both excellences of character and of intelligence, and the significance of non-rational aspects of morality, including emotions, will, responsibility and choice. Research limitations/implications This perspective provides an alternative conceptualisation of the ethics of professional accountants. Although it does not provide concrete guidance regarding what the ethical approach to specific situations may be, it presents a useful counterpoint to existing approaches that are largely deontological and utilitarian. Practical implications This paper provides accountants in practice with a more comprehensive and adequate perspective on what it means for a professional accountant to be ethical, and raises several issues related to how ethics is included in the education and training of accountants. Originality/value Investigating the philosophical basis for professional ethics approaches professional codes of ethics in a way that it is not typically considered. The paper also provides a more comprehensive application of Aristotelian ethics than previous work.

Corporate board and corporate social responsibility assurance: Evidence from China

This paper investigates the association between board characteristics and the company’s corporate social responsibility (CSR) assurance decision in China. By examining 2054 firm-years of Chinese listed companies with CSR reports from 2008 to 2012, we find that firms with a large board size, more female directors, and separation of CEO and chairman positions are more likely to engage in CSR assurance. Gender diversity also influences the CSR assurance provider choice. However, board independence and overseas background of the CEO do not affect the CSR assurance decision. Inconsistent with our prediction, firms with foreign directors are less likely to engage in voluntary CSR assurance. In summary, this research provides in-depth insights into the determinants of Chinese firms’ voluntary CSR assurance.