The Role of Auditors in Detecting Financial Fraud

ABSTRACT Researchers and practitioners have made various attempts to identify fraud indicators and to build fraud prediction procedures that will avert the occurrence of fraud in any given institution. Fraud is a big subject within the financial world as it brings threat that inflicts significant financial losses and erodes morale within organizations. It represents a critical issue for the accounting profession, in both developed and undeveloped countries that needs to be addressed. The thesis dwells on the crucial role of auditors in detecting and preventing financial fraud, particularly in the contemporary business environment that is characterized by increasingly complex computer systems. While traditional methods of detecting and preventing financial fraud might have some limitations persist, the thesis will again dwell on the growing adoption of Artificial Intelligence (AI) and Data Analytics within the auditing profession, to presents a transformative approach to fraud detection and prevention that the traditional auditing have oversight or could not capture. This research will therefore explore the potential of AI in bolstering auditors' capabilities to identify and mitigate fraudulent activities within financial statements. Additionally, the thesis critically analyzes existing fraud detection research and identifies key shortcomings. Notably, these studies of literature reviews have suggested an increase in fraud detection rates with the adoption of more advanced technologies and data analytics tools. Notwithstanding, the paper also highlighted the limitations imposed by auditors' lack of extensive legal expertise and specialized training in identifying all forms of illegal activity within an organizational framework.