Year

2013

Degree Name

Doctor of Philosophy

Department

Faculty of Commerce

Abstract

Despite extensive audit research relating to professional scepticism, ambiguity tolerance, judgement and decision making in the fraud domain, fraud detection rates by auditors remain low. This study provides a rationale for and a description of an experiential learning activity in an online environment, which is designed to enhance the fraud detection knowledge and skills of audit students.

The methodology operates within the constructivist interpretive paradigm encompassing the e-learning environment, a mixed-method research design and methods of data collection suited to this inquiry. The case study involves final year auditing students. The research investigates the process by which audit teams undertake the task of fraud detection through a protocol analysis, and presents findings from individual survey instrument data.

The knowledge and skill acquisition activity (KSAA) builds on existing knowledge and assists in knowledge construction to engage and facilitate critical thinking. This teaching tool provides experience in a real-world setting and requires operative knowledge and the application of audit processes and procedures to identify and resolve the frauds. The KSAA encourages participants to consider the possibility of fraud in all audits, and thus to become more cognisant of ‘red flags’ that may lead to uncovering fraud with more exploration and information.

Important elements of the activity are the online environment, the fraud detection life cycle (McCormack 2011), fraud-specific audit knowledge, experiential learning using a problembased learning case and the involvement of an expert tutor. The fraud detection experience is provided in a ‘safe’ online learning environment.

Participants are randomly allocated by software into three- or four-member audit teams, and an expert tutor (who remains anonymous) plays all information-providing roles (e.g., company officer and external third party roles such as bank officer) online. The physical roleplay environment is a computer with constant access to the confidential team discussion space. There is no face-to-face collaboration. All collaborations are written, as are external requests for information. The concurrent benefit of online communication is that it enables better quality verbalisation of thinking than face-to-face collaboration and prompts reflection, reasoning, analysis, evaluation and problem solving. The written communication in the discussion space allows the capture of 24/7 individual ‘thinking’ for later review.

By analysing the scenarios, asking questions and thinking things through, participants are able to form an opinion and to make a judgement. Overall, the aim is to activate a process of building awareness of ‘red flags’ and developing skills for detecting them. So the students are required ‘to solve the fraud’, with a great deal of scaffolding built in. As a result, the students are far better equipped because they have more awareness and understanding as to where they might begin their search.

The key conclusion is that the online team collaboration allows meaningful discussion that in turn enables students to make connections. The ability to make connections is the skill that needs to be enhanced, and this in turn is supported by collaboration and reflection fostered in the team. Participants perceive an enhancement in knowledge and problem-solving skills in the fraud domain after completing the activity.

FoR codes (2008)

1501 ACCOUNTING, AUDITING AND ACCOUNTABILITY

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Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.