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Method of Fraud Risk Estimating in the Audit Process


  • Rostov State University of Economics (RINH), Russian Federation
  • South Federal University, Russian Federation


Background/Objectives: The article deals with methods of material misstatement risk assessment due to fraud in the process of external audit. Methods/Statistical analysis: On the basis of the fraud triangle, a theory of risk assessment algorithm has been proposed based on the expert method. Findings: The significance of risk factors has been determined with regard to their probability and an integrated assessment based on the multiplicative model has been obtained. The presented algorithm of fraud risk assessment is versatile. It can be used to assess risk of material misstatement due to fraud both at the level of the audited statements as a whole and at the level of individual statements (assumptions), as well as balances on accounts, groups of transactions and disclosures, which fully complies with all the existing performance standardization systems. Application/Improvements: The algorithm is versatile and does not require a significant investment of time and resources.


Audit, Risk Assessment Algorithm, Fraud Triangle.

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