THE ROLE OF THE AUDITOR IN PREVENTING FINANCIAL FRAUD AND CONFLICTS OF INTEREST

Abstract

The article is devoted to a comprehensive analysis of financial fraud and conflicts of interest in the field of audit activities, with an emphasis on the Ukrainian context. It reveals the main aspects and challenges related to the identification and counteraction of financial fraud in the business environment, as well as strategies and best practices that auditors can apply to ensure transparency, objectivity and responsibility in their work. The purpose of the article is to highlight the key aspects of behavior and show the role of the auditor in detecting financial fraud and how they can avoid conflicts of interest. To this end, the article shows the essence of financial fraud and conflicts of interest, including an understanding of the main forms and methods by which they are carried out in business processes and how this affects the credibility of financial statements. The study highlights the area of responsibility of both the client and the auditor. This will help to clarify what responsibilities lie with the management of companies to prevent financial fraud, as well as how auditors can contribute to increasing transparency and accountability in organizations. As for the actions of the auditor in detecting financial fraud, the steps and procedures that should be taken to ensure an adequate response to the detected violations and minimize their negative consequences are analyzed and recommended. In the context of conflicts of interest, the situations in which such conflicts most often arise are considered and it is shown how they can affect the independence and objectivity of audit activities. The study outlines the strategies and approaches that the auditor should use to avoid conflicts of interest. This includes recommendations on ethical behavior, the principles of professional independence, as well as internal control mechanisms and rotation of audit engagements. The practical significance of the article is that it provides useful insights and recommendations for auditors, company executives, regulators and other stakeholders seeking to improve the effectiveness of financial risk management and strengthen corporate governance. It helps to understand how to properly identify potential conflicts of interest and fraudulent schemes, as well as what actions should be taken to eliminate them or minimize their impact on the organization.