Modeling the management staff behavior by an auditor

Abstract

The paper considers the problem of modeling the management staff behavior by an auditor. The need to consider such a problem is due to the requirements of the International Auditing Standards (IAS) regarding the audit procedure based on a behavioral approach. This approach is aimed at learning the behavior of participants of the accounting and audit from the view of the interests and motives of the participants in the accounting. Since the central place in the criminological characteristics of fraud is the way it is committed, IAS recommend for an auditor to assess the vulnerability of relevant aspects of financial reporting related to possible ways of its committing even at the stage of audit planning. And using the method of analogy to predict the management staff behavior, and thus to determine the audit procedures and areas of audit evidence collection. IAS require an auditor to maintain the understanding of the entity and its environment during the audit. The point A1 of IAS 315 emphasizes that gaining the understanding of the entity and its environment is a permanent and dynamic process of gathering, updating and analyzing information during the audit. This understanding forms the system of criteria within which an auditor plans the audit and performs the professional judgment during the entire audit. Any planning process, including audit, consists of forecasting and modeling functions. In preparing the plan's specific measures, an auditor predicts and models in his professional judgment the management staff behavior and its actions related to financial statements in the form of versions. Based on the results of inspection, an auditor makes a conclusion related to the reliability of financial reporting, its completeness and compliance with legislation. Based on the research, in the final part of the paper the scheme for modeling the management staff behavior by an auditor is proposed.