Attributes of Audit Committee and Detection of Occupational Fraud with the Moderating Role of Internal Control System

Abstract

This study seeks to determine the effect of the attributes of the audit committee (e.g., size, meeting frequency, financial accounting and audit expertise, and the independence of the audit committee) on the detection of occupational fraud. This research also investigated the role of the internal control system as a moderator in the relationship between the audit committee’s attributes and occupational fraud. Data were collected from 413 respondents working in accounting, finance, and audit departments of the companies listed on the Pakistan Stock Exchange. The PLS-SEM technique was used to test the hypotheses. The results show that the attributes of the audit committee have a positive and significant effect on the detection of occupational fraud. The internal control system significantly strengthens the influences between the latent variables in the model. This study lays out both the real-world implications and some hands-on policy tips for managers, policymakers, regulators, audit firms, and investors. It's all about helping them to recognise the role of the audit committee in detecting occupational fraud, and how to make that committee sharper and more effective in its role.