The Impact of Auditor Competence on Fraud Detection in China

Abstract

In recent years, the issue of corporate fraud has gained increasing attention in both academic research and professional practice, the role of auditors in fraud prevention and detection has become increasingly critical. This study investigates the impact of auditor competence—comprising technical knowledge, professional skepticism, and professional ethics—on fraud detection performance in China. Drawing on data from 382 practicing auditors and analyzed using SPSS statistical analysis, the findings reveal that all three dimensions significantly enhance auditors’ fraud detection capability, with professional skepticism exerting the strongest influence, followed by technical knowledge and professional ethics. These results suggest that a questioning mindset, analytical acumen, and ethical integrity collectively determine the effectiveness of fraud identification. In particular, professional skepticism enables auditors to critically evaluate audit evidence, challenge management assertions, and maintain vigilance when confronted with ambiguous or conflicting information. Technical knowledge equips auditors with the analytical and procedural skills necessary to identify complex fraud schemes, while professional ethics ensure that judgments remain objective and independent despite social or client-related pressures. The study also highlights the unique institutional and relational dynamics within the Chinese auditing context, where factors such as guanxi and regulatory expectations may influence auditor behavior. Practical implications emphasize the importance of enhancing continuous professional education, integrating ethics and skepticism into competency frameworks, and cultivating an audit culture that encourages transparency and critical inquiry. By linking core auditor competencies to measurable fraud detection outcomes, this research contributes to improving audit quality and reinforcing public confidence in financial reporting.