Proceedings of The First International Conference on Financial Forensics and Fraud, ICFF, 13-14 August 2019, Bali, Indonesia

Research Article

Barriers to Fraud Risk Assessments in The Public Sector: The Deviations of SAS No.99

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  • @INPROCEEDINGS{10.4108/eai.13-8-2019.2294256,
        author={Mohamad  Mahsun and Nafsiah  Mohamed and Sharifah  Norzehan and Indrawati  Yuhertiana},
        title={Barriers to Fraud Risk Assessments in The Public Sector: The Deviations of SAS No.99},
        proceedings={Proceedings of The First International Conference on Financial Forensics and Fraud, ICFF, 13-14 August 2019, Bali, Indonesia},
        publisher={EAI},
        proceedings_a={ICFF},
        year={2020},
        month={5},
        keywords={fraud fraud risk assessment sas 99 public sector fraud detection auditors abilities},
        doi={10.4108/eai.13-8-2019.2294256}
    }
    
  • Mohamad Mahsun
    Nafsiah Mohamed
    Sharifah Norzehan
    Indrawati Yuhertiana
    Year: 2020
    Barriers to Fraud Risk Assessments in The Public Sector: The Deviations of SAS No.99
    ICFF
    EAI
    DOI: 10.4108/eai.13-8-2019.2294256
Mohamad Mahsun1,*, Nafsiah Mohamed2, Sharifah Norzehan2, Indrawati Yuhertiana3
  • 1: STIE Widya Wiwaha
  • 2: Universiti Teknologi MARA
  • 3: Universitas Pembangunan Nasional “Veteran”
*Contact email: mohmahsun@stieww.ac.id

Abstract

Fraud may never be fully prevented, but detection responsibilities of auditors will continue to increase with growing public dissatisfaction of auditing results. Statement on Audit Standards (SAS 99) requires the auditor to carry out the Fraud Risk Assessment (FRA) at the planning stage in each audit assignment. However, to identify fraud risk factors is a big problem because of budget and time constraints. Auditors may not be fulfilling these expectations to the best of their abilities. It would be prudent for auditors to have extremely good reasons for any deviations from SAS No. 99 to mitigate their own liabilities in fraud discovery. The expectation gap between SAS 99 and the auditor's role in detecting fraud occurs in both the business sector and the public sector. In this paper, we critically examine constraints in implementing FRA in public sector audits. We argue that the implementation of FRA failed so that it cannot reduce fraud in the public sector.