Structural equation model (SEM) application for the determination of auditor liability in financial information manipulation and fraudulent financial reporting

According to 2010 Global Fraud Study, that is published by American Association of Certified Fraud Examiners (ACFE), a potantial total fraud loss of more than $ 2.9 trillion. One- fourth of the frauds in this Report caused at least $ 1 million in loses. The numbers above are illustrated abviously that the economic dimension of fraudulent financial reporting and it can be played an important role to detect and prevent financial information manipulation. The critical role of fraudulent financial reporting is also important for functioning of capital markets. Especially after recent accounting and audit failures effects upon the capital markets have resulted in heightened public concern towards the accounting and auditing profession is displayed the important role of fraudulent financial reporting. In this respect the aim of this study, examining auditor liability in financial informaion manipulation and fraudulent financial reporting in Turkey and identifying the importance of auditing mechanisms based on auditor liability. For the purpose of the study, elements of the auditor?s responsibility to detect financial information manipulation and fraudulent financial reporting are discussed and put forward a theoretical model of these elements through the measurement model using structural equation model is created.