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Examining the Role of Personality Traits, Digital Technology Skills and Competency on the Effectiveness of Fraud Risk Assessment among External Auditors

Author

Listed:
  • Nurul Izzaty Mat Ridzuan

    (Q Homes Sdn Bhd, Shah Alam 40000, Malaysia)

  • Jamaliah Said

    (Accounting Research Institute, ARI HICoE, Universiti Teknologi MARA, Shah Alam 40450, Malaysia)

  • Fazlida Mohd Razali

    (Accounting Research Institute, ARI HICoE, Universiti Teknologi MARA, Shah Alam 40450, Malaysia)

  • Dewi Izzwi Abdul Manan

    (Faculty of Business, Accountancy and Social Science, Kolej Universiti Poly-Tech MARA, Cheras 56100, Malaysia)

  • Norhayati Sulaiman

    (Faculty of Business, Accountancy and Social Science, Kolej Universiti Poly-Tech MARA, Cheras 56100, Malaysia)

Abstract

In accordance with ISA 240, it is the responsibility of external auditors to obtain reasonable assurance that financial statements are free from material misstatement, whether caused by fraud or error. Recently, the auditing profession in Malaysia has been significantly challenged by the explosion of fraud cases and by auditors’ failure to determine the “true and fair view” of the financial statement. This incident has tarnished the reputation of the audit profession. The effectiveness of the external auditor function, especially when related to fraud risk assessment, is commonly called into question. Hence, this study aims to assess individual factors (personality traits, digital technology skills, and competency) that may contribute to the effectiveness of fraud risk assessment among external auditors. A total of 455 questionnaires were distributed to external auditors, and a total of 150 (32.96%) responses were received. Data were thoroughly analyzed using Smart-PLS 4.0. This study found that digital technology skills contribute to the effectiveness of fraud risk assessment, whereas personality traits and competency do not. The findings implied that an effective technique of fraud risk assessment among external auditors requires digital technology skills. This study contributes to the literature by confirming the critical role of digital technology skills in enhancing the effectiveness of fraud risk assessments.

Suggested Citation

  • Nurul Izzaty Mat Ridzuan & Jamaliah Said & Fazlida Mohd Razali & Dewi Izzwi Abdul Manan & Norhayati Sulaiman, 2022. "Examining the Role of Personality Traits, Digital Technology Skills and Competency on the Effectiveness of Fraud Risk Assessment among External Auditors," JRFM, MDPI, vol. 15(11), pages 1-14, November.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:11:p:536-:d:975804
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    References listed on IDEAS

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    1. Hayek, F. A., 2012. "Hayek on Hayek," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226321202 edited by Kresge, Stephen & Wenar, Leif, August.
    2. Ala'a Zuhair Mansour & Aidi Ahmi & Oluwatoyin Muse Johnson Popoola, 2020. "The Personality Factor of Conscientiousness on Skills Requirement and Fraud Risk Assessment Performance," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 405-415, April.
    3. Inez G. F. Verwey & Stephen K. Asare, 2022. "The Joint Effect of Ethical Idealism and Trait Skepticism on Auditors’ Fraud Detection," Journal of Business Ethics, Springer, vol. 176(2), pages 381-395, March.
    4. Samagaio, António & Felício, Teresa, 2022. "The influence of the auditor’s personality in audit quality," Journal of Business Research, Elsevier, vol. 141(C), pages 794-807.
    5. Herron, Eddward T. & Cornell, Robert M., 2021. "Creativity amidst standardization: Is creativity related to auditors’ recognition of and responses to fraud risk cues?," Journal of Business Research, Elsevier, vol. 132(C), pages 314-326.
    6. Knapp, Carol A. & Knapp, Michael C., 2001. "The effects of experience and explicit fraud risk assessment in detecting fraud with analytical procedures," Accounting, Organizations and Society, Elsevier, vol. 26(1), pages 25-37, January.
    7. Nora Azima Noordin & Khaled Hussainey & Ahmad Faisal Hayek, 2022. "The Use of Artificial Intelligence and Audit Quality: An Analysis from the Perspectives of External Auditors in the UAE," JRFM, MDPI, vol. 15(8), pages 1-14, July.
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    Cited by:

    1. Adriana Tiron-Tudor & Widad Atena Faragalla & Anca Pianoschi, 2025. "The role of the accountancy professionals in detecting and preventing fraud, in a digital landscape: a systematic literature review," Digital Finance, Springer, vol. 7(4), pages 745-786, December.
    2. Anca Pianoschi & Stefania Mierlita, 2025. "Revising ISA240 in a digital world: the sociomaterial perspective on fraud, technology, and stakeholder influence," Digital Finance, Springer, vol. 7(4), pages 921-947, December.
    3. repec:bcp:journl:v:9:y:2025:i:10:p:9076-9086 is not listed on IDEAS

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