Table of Contents

Research Handbook on International Financial Crime

Research Handbook on International Financial Crime

Research Handbooks in Financial Law series

Edited by Barry Rider

A significant proportion of serious crime is economically motivated. Almost all financial crimes will be either motivated by greed, or the desire to cover up misconduct. This Handbook addresses financial crimes such as fraud, corruption and money laundering, and highlights both the risks presented by these crimes, as well as their impact on the economy. The contributors cover the practical issues on the topic on a transnational level, both in terms of the crimes and the steps taken to control them. They place an emphasis on the prevention, disruption and control of financial crime. They discuss, in eight parts, the nature and characteristics of economic and financial crime, the enterprise of crime, business crime, the financial sector at risk, fraud, corruption, the proceeds of financial and economic crime, and enforcement and control.

Chapter 50: Auditors and fraud detection: an elusive role?

Maria Krambia-Kapardis

Subjects: economics and finance, financial economics and regulation, law - academic, corruption and economic crime, finance and banking law


Etymologically, the word ‘audit’ is derived from the Latin word ‘audire’ which means to hear. Auditing appears to date back to around 350 BC in ancient Greece, Egypt and China and, in England, to the Exchequer during the reign of Henry I (1100–1135), where audit officers were appointed to make sure that state revenue and expenditure transactions were properly accounted for. Similar auditing activities have also been traced back to the Italian City States of Florence, Genoa and Venice. It seems that pre-1840 auditing involved the performing of detailed verification of every transaction. Some authors have argued that the audit objective was that of verifying the honesty of persons in charge of fiscal rather than managerial responsibilities. Following the industrial revolution, auditors began utilizing sampling techniques because it was nearly impossible to audit every transaction. This came about because of the accelerating growth of the world economies, the advancement of credit granting institutions, the socio-developments in the UK and the development of the Stock Exchange. The evolution in auditing as well as the application of the materiality concept caused a change in audit opinion from ‘complete assurance’ to ‘reasonable assurance’. The auditing profession has been criticized and auditors have been sanctioned for failure to: (a) gather sufficient competent evidence, (b) exercise due professional care, (c) exercise a sufficient level of professional scepticism, (d) obtain evidence related to management representations and (e) express an audit opinion.

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