Abstract:
These study aims at investigating the reasons for the huge financial statement frauds
in big companies that engulfed? the world especially in the USA between 2000 to
2008 and why auditors were unable to detect them. To enable me achieve this
purpose three multinational corporations were used for the study, two from USA and
one from Italy. The main objective of this study was to evaluate the role of the auditor
. in fraud detection and to know the reasons why senior executive perpetrate this
fraud. The researcher made use of questionnaires which were address to tVJO
international auditing firm's base in Nigeria and one to the regulating body ICAN. The
questions' were in the form of interviews which gave the respondent an open mind to
give his or her own view point as concern reasons why these massive frauds have
remain un-detected. The researcher also made use of secondary data obtained frorn
books, the internet and the company's annual reports for the periods the fraud was
committed. Data was analyzed using logistic regression , rnultivariate analysis, and
sensitivity analysis. Findings from the research shows that top management where
responsible for the frauds , evidence shows that internal control policies for the
companies were prepared by top management who at the same time were those who
perpetrated the fraud hence this control measures were meant to control lower
management and not them. Secondly findings further show that, the Board of
.Directors of these companies where dominated by friends and family members of the .
-,CEO and thus helpinq in cornmitting the fraud. One other assertion was to hike the
prices of the stocks of the companies; consequently the books were cook to meet
" V'Jall Street projections. Finally my results shows that the frauds in the three
companies were very similar, first of all the founders of the companies were the main
perpetrators of the frauds, secondly both occupy double positions of chairman and
CEO and lastly the auditors of both firms had stayed for too long and also did non
audit services for their firms which were more lucrative than the audit services , this
help compromise their independence as auditors. The researcher made some
recommendations base on the Sarbanes Oxley Act of 2002 .
