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Establishing Proactive Auditor Responsibilities in Relation to Fraud: The Role of the Courts and Professional Bodies in Denmark

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  • Claus Holm
  • Lars Bo Langsted, Juridisk Institut, Denmark
  • Jesper Seehausen, Institut for Økonomi og Ledelse, Denmark
Over the years, there has been considerable discussion about the extent and exact nature of the responsibilities of the auditor to detect fraud. The purpose of our study is to examine how the courts and professional bodies in a principle-based legal system respond to the change in the audit promulgations introducing proactive responsibilities in relation to fraud. We observe the outcome of actual fraud cases in which the court system and professional bodies in Denmark establish the responsibilities of auditors. The data set includes all publicized cases in the period 1996–2006. We find that the Danish audit profession has adopted the new proactive responsibilities identified by the standard setters, whilst the courts and the professional bodies seem to see ‘the changes’ as mere clarifications of existing responsibilities. The proactive responsibilities are not further accelerated by prescriptive court rulings.
Original languageEnglish
JournalInternational Journal of Auditing
Pages (from-to)79-97
Number of pages19
Publication statusPublished - 2012

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