Research Limitation and Recommendation - Auditors Perceptions Towards the Effectiveness of the

Auditors Perceptions Towards the Effectiveness of the International Standard on Auditing 240 Red Flags: Evidence

5. Research Limitation and Recommendation

Hijazi, W., Mahboub, R.

171

Predictors: (Constant), Att, Press, opp Dependent Variable: Fraud

Source: SPSS (20)

The ANOVA findings from Table (5) indicate F calculated of 10.229 and p-value of .000; this is an indicator that the overall regression model was significant.

Table 6. Coefficient

Model Unstandardized

Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta

1 (Constant) 2.758 1.206 2.287 .024

Pressures 1.280 .473 .532 2.708 .008

Opportunities 1.496 .798 .601 1.875 .064

Attitudes -2.655 .842 -.816 -3.153 .002

Source: SPSS (20)

Table (6) shows that the coefficient of pressures has the positive expected sign (1.280) and it is significant (.008). This indicates that pressures is significantly positively influencing the FFR occurrence in Lebanon. Hence, hypothesis 1 is accepted. The coefficient of opportunities is positive (1.496) and insignificant (.064).

This reveals that there exists a positive influence of opportunities on the FFR occurrence in Lebanon, but it is not statistically significant. Consequently, hypothesis 2 is rejected. The coefficient of attitudes has the negative unexpected sign (-2.655) and it is significant (.002). This signifies that attitude is significantly negatively influencing the FFR occurrence in Lebanon. Hence, hypothesis 3 is rejected.

4.5 One-Sample Wilcoxon Signed Rank Test

According to Table (7), p- value is 0.000 (significant). Thus, the null hypothesis has been rejected. Consequently, there is a sufficient evidence at 0.05 level to conclude that the median of IAS 240 differs significantly from 3. Hence, hypothesis 4 is accepted.

Table 7. One-Sample Wilcoxon Signed Rank Test Null

Hypothesis

Test Sig. Decision

Median of IAS 240 = 3

One-Sample Wilcoxon Signed Rank Test

0.000 Reject the null

hypothesis Asymptotic Significances are displayed. The significant level is 0.05

Source: SPSS (20)

Auditors Perceptions Towards the Effectiveness of the International Standard on Auditing 240 Red Flags: Evidence from Lebanon

172

This research aims to identify a set of fraud risk factors that had been adopted by ISA (240) as well to investigate the roles of ISA 240 RF in aiding external auditors in Lebanon in detecting MM in the financial statements. To achieve the intended objective, the research was based on a self- administered questionnaire of 41-RF. By employing multivariate OLS model, the finding of the research shows that there is a positive significant association between pressures and FFR occurrence in Lebanon.

However, there were no support for opportunities and attitudes to be associated with FFR occurrence in Lebanon. Moreover, the finding provides a strong evidence that ISA 240 RF for FFR can aid external auditors in detecting MM due to fraud in Lebanon. Hence, the list of specific RF for FFR that were used in this research can be used in conjunction with SAS 99 RF to enhance external auditors’ ability in detecting FFR. Therefore, it is believed that these findings contribute to the academicians to further spread out the research in this area, users of financial reports, audit profession and audit standard setters by reflecting the importance of RF list to the external auditors.

The research is not without limitations. The researchers were not able to get more than 130 LCPA working in the audit firms in Lebanon out of 1300 LCPA to fill in the questionnaire and thus the results cannot be generalized to all LCPA working in Lebanon. Future research is needed to increase the sample size to generalize the results. This may provide additional insights into the external validity of the findings. The current research examined the RF for FFR based on a questionnaire;

future research should test them using other methods like experiments or interviews.

The researchers tried to list every possible RF for FFR but certainly, there can be other RF in the literature that are not mentioned in this research. Thus, future research should be more directed toward listing other RF for FFR. Therefore, the current research recommends LCPA working in the audit firms in Lebanon to focus their efforts more on high quality RF, which will in turn facilitate fraud detection in the financial statements.

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Putra, A.P. 2014. Fraud triangle, pressure, opportunity, and rationalization and the level of accounting irregularities in Indonesia. Available at: ibs.ac.id.

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Academy of Accounting and Financial Studies Journal, 20(1), 80-92.

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Yücel, E. 2013. Effectiveness of red flags in detecting fraudulent financial reporting: an application in Turkey. Journal of Accounting and Finance, 60, 39-158.

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