A digitally transformed system of internal control for effective financial statement fraud prevention and detection: A literature review

<ns3:p>Purpose: The paper aims to provide an overview of the current state-of-the-art research regarding the impact of system of internal control on fraud deterrence, primarily analyzing whether and how digital technologies can enhance components of this system, focusing on control activities, for better prevention and detection of financial statement fraud. Methodology/approach: A literature review and a thematic analysis of the most recent scientific and professional studies related to anti-fraud technologies, systems of internal control and financial statement fraud are conducted. Findings: The literature review revealed that the most prominent research avenues in the field are related to applying the fraud diamond model and identifying common red flags, tools, and techniques for financial statement fraud prevention and detection, as well as investigating the impact of digital business transformation and the adoption of digital technologies on a company’s system of internal control as an anti-fraud mechanism. Research limitations/implications: The limitations of the study relate to the literature review design and the focus on secondary sources. Therefore, future studies should aim to conduct primary research to provide confirmation of or new research outlets for existing assumptions on this topic. Originality/value: This paper contributes to enhancing existing theoretical and practical state-of-the-art knowledge regarding the usefulness of technologies for transforming systems of internal control as the primary tools of corporate anti-fraud programs in the contemporary digital era.</ns3:p>