This paper explores criminal prosecutions arising from auditor findings. We leverage a unique arrangement among auditors, investigators, and attorneys in Arkansas to explore the prosecutorial trends for criminal charges originating with governmental auditors. We analyze 404 charging events arising from unique individual person/audit report combinations from 2004-2018. The sample reflects an average loss amount of $53,677. Charges are most often arising from cities, counties, and school districts (70%). However, cities are most successful at recovering funds of these three types of entities. The most frequent charge is theft. We test hypotheses relating to the imposition of fines and incarceration. Our results reflect that fines are the most common punishment. The incarceration for white collar crimes is positively associated with the degree of loss incurred. Our paper provides a unique contribution to the auditing and the forensic accounting literature with exploration of the criminal prosecutions arising from auditor findings and their resulting criminal charges including sentencing outcomes.

From Audit Finding to Guilty Plea

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