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1 – 10 of 138Widya Ais Sahla and Ardianto Ardianto
This study aims to examine the fraud tendency on the perception of external auditors triggered by five components of the fraud pentagon: pressure (P), opportunity (O)…
Abstract
Purpose
This study aims to examine the fraud tendency on the perception of external auditors triggered by five components of the fraud pentagon: pressure (P), opportunity (O), rationalization (R), competence (C) and arrogance (A). In addition, ethical values (EV) are placed as a moderating variable for this relationship.
Design/methodology/approach
This is a quantitative study with a survey to external auditors around Indonesia. A moderation model for a research framework was developed to investigate the moderating role of ethical values.
Findings
The findings have shown that the five components of the fraud pentagon theory are not fully proven as triggers of fraud in the perception of external auditors. Only C and A have a significant value in influencing the perception of fraud tendency (PFT). Other findings also provide evidence that EV moderate the relationship between C and A to PFT. This shows that EV can be used as an anti-fraud strategy in the external auditor environment.
Originality/value
The originality of this paper is one of the first study that examines the fraud pentagon theory in the field of behavioral accounting. In addition, this paper contributes to the integration of ethical values as an anti-fraud strategy in the external auditor environment.
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Mehdi Sarikhani and Fahime Ebrahimi
The purpose of this study is to investigate the factors affecting the whistleblowing intentions (WBI) by Iranian accountants by integrating the fraud pentagon and the extended…
Abstract
Purpose
The purpose of this study is to investigate the factors affecting the whistleblowing intentions (WBI) by Iranian accountants by integrating the fraud pentagon and the extended theory of planned behavior.
Design/methodology/approach
The population was made up of accountants from all of the 400 companies listed in the Tehran Stock Exchange and the authors used a quantitative survey-based method. Out of a total of 300 questionnaires administered, 171 valid responses were used for analysis. This research used the partial least squares structural equation modeling analysis using SmartPLS 3.3.3 to examine the proposed hypotheses and to analyze the research model.
Findings
The results indicated that the extended theory of planned behavior components (perceived behavioral control, perceived subjective norms (PSN), perceived moral obligation and attitudes toward whistleblowing) have positive effects on accountants’ internal WBI. The results of investigating the moderating effect of perceived moral intensity (PMI) on the relationship between components of the extended theory of planned behavior and WBI show that PMI moderates the effect of PSN on WBI.
Originality/value
This study develops the whistleblowing literature by bringing together the components of the fraud pentagon and the extended theory of planned behavior and providing an integrated model. This model, which incorporates many variables from previous research, seeks to provide a comprehensive model for whistleblowing with the expansion of the Brown et al. (2016) model.
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Sarwenda Biduri and Bambang Tjahjadi
The purpose of this study was to determine the determinants of financial statement fraud: the perspective of pentagon fraud theory.
Abstract
Purpose
The purpose of this study was to determine the determinants of financial statement fraud: the perspective of pentagon fraud theory.
Design/methodology/approach
This study used quantitative methods with an explanatory research design by applying secondary data on Islamic banking companies listed on the Indonesia Stock Exchange (IDX).
Findings
External pressure affects financial statement fraud, ineffective monitoring affects financial statement fraud, external auditor quality affects financial statement fraud, change in auditor affects financial statement fraud, frequent number of CEO’s picture affects financial statement fraud, external pressure affects firm size, ineffective monitoring affects firm size, external auditor quality affects firm size, change in auditor affects firm size, frequent number of CEO’s picture affects firm size, firm size affects financial statement fraud, firm size mediates the relationship between external pressure on financial statement fraud, firm size mediates the relationship between ineffective monitoring on financial statement fraud, firm size mediates the relationship between external auditor quality and financial statement fraud, firm size mediates the relationship between change in auditor and financial statement fraud, firm size mediates the relationship between frequent number of CEO’s picture and financial statement fraud.
Research limitations/implications
The limitations of this research were found during the research process and can be used as input for further research and related parties in conducting the research to obtain better research results. The limitations of this study are as follows: this study only focused on Islamic banking, so it cannot be generalized to other sectors. Besides, this study only tested five independent variables, one dependent variable and one mediating variable.
Practical implications
For external auditors, financial statement fraud by management might be caused by many factors and is a social as well as an economic problem that must be addressed immediately. Therefore, in carrying out the duties and roles as an external auditor, they must have an attitude of independence (not taking sides) in the mental attitude that must be maintained by the auditor related to the assignment. Auditors must have sufficient technical expertise and training as auditors. In carrying out the audit, the auditor should use their professional skills in responding carefully and thoroughly. Moreover, in carrying out audit work, the auditor must have a plan, must know adequate internal control and obtain sufficiently competent audit evidence.
Originality/value
To the best of the authors’ knowledge, very few studies in Indonesia have applied the Beneish model. There is only one study that implemented the Beneish model, and the study examined only a few companies listed on the IDX. The findings of the present study have important implications not only for banks but also for users of financial statement accounts in Indonesia, especially for investors, auditors, regulators, taxation and other state authorities.
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Shefali Saluja, Arun Aggarwal and Amit Mittal
The fraud landscape talks about the existence of fraudulent activities and can be assessed with the help of fraud literature. Taking this into consideration, this paper…
Abstract
Purpose
The fraud landscape talks about the existence of fraudulent activities and can be assessed with the help of fraud literature. Taking this into consideration, this paper qualitatively revisits the famous fraud triangle theory developed by Donald R. Cressey (1950) which is the most traditional theory to detect a fraud. This paper aims to discuss various fraud models that have been extensions to fraud triangle theory and reviews the factors that drive a corporate fraud. This study is divided into two phases. The first phases discuss the various theories which have been developed to detect and prevent corporate frauds in organisations, and in the second phase the authors recognize “integrity” as a new extension to the basic fraud theory. The integrity model has been introduced as “fraud square” contributing to the development of fraud theory. Integrity plays a very important role in detecting corporate frauds, and this paper will act as a theoretical benchmark for future references. The implication of this study would help future researchers, academicians and practitioners to understand the fourth element of the fraud theory and would help improve the professional standards of organisations and regulators.
Design/methodology/approach
This paper revisits the literature in detail and reviews the most acknowledged models to explain “why people commit frauds” – the fraud triangle, fraud scale, the fraud diamond, the ABC model, the MICE model and the SCORE model. The authors contend that the traditional models need to be modernized to acclimate to the current developments in the rapidly increasing fraud incidents, both in occurrence and seriousness. Additionally, this paper builds on theoretical background to generate new model so as to improve the understanding behind the major factors which lead to commitment of frauds.
Findings
The authors identify a major element – integrity – in the research. As per ACFE 2020, “There are more than 3.3 billion people in the global workforce, half of them takes illegal use of gains from the organisation and some are discipled with integrity who does not cause any harm to the organisation.” To prevent fraud, integrity plays a very important role in organisations (Bakri et al., 2017). It has been found that individuals with less integrity are basically specified to a greater level of mismanagement. The organisations that have worked with integrity will improve performance at work and will always promote the best employees to work with less supervision.
Originality/value
This paper develops the integrity model to contribute to the development of fraud theory by identifying the key factors that play a major role in whether fraud will actually occur and acting as a theoretical benchmark for all future reference.
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Although corporations exert considerable efforts to uphold ethical standards in their business operations, fraud instances persist as an enduring and formidable challenge within…
Abstract
Purpose
Although corporations exert considerable efforts to uphold ethical standards in their business operations, fraud instances persist as an enduring and formidable challenge within organisations, defying their utmost efforts. The presence of fraud poses a substantial and recurring threat to corporations, leading to significant financial losses on an annual basis. This emphasises the crucial need for a comprehensive understanding of the factors contributing to fraudulent activities and the intricate nature of fraud risk factors inherent in business operations. Therefore, this paper aims to enhance the efficacy of fraud detection and prevention measures through critical analysis and refinement of established fraud theories, drawing upon the existing literature on this subject matter.
Design/methodology/approach
This paper offers a comprehensive qualitative analysis of the existing literature, thoroughly reviewing prominent models that aim to elucidate the underlying motivations behind fraudulent behaviour. Moreover, drawing upon the existing theoretical foundation, this study conceptualises a model that enhances the understanding of the crucial factors contributing to fraudulent behaviour.
Findings
The study presents new theoretical insights concerning the role of personal integrity in fraudulent decision-making, presenting refined interventions that enhance comprehension of the underlying drivers of fraud occurrences and strategies for prevention. Furthermore, the study reveals a comprehensive three-part approach to improving organisational health through strengthening compliance mechanisms and cultivating an ethical-values-based culture.
Originality/value
The study introduces a novel conceptual framework, the personal ethic-based fraud motivation model, which offers a deeper understanding of the factors and conditions influencing individuals’ propensity to engage in fraudulent activities. Furthermore, this study presents a three Cs strategy that effectively delineates the influential forces that drive individuals to surmount fraud risks.
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Christine Avortri and Richard Agbanyo
Fraud has become one of the most challenging issues facing the financial sector of most countries globally. These fraudulent transactions have led to loss of huge sums of money to…
Abstract
Purpose
Fraud has become one of the most challenging issues facing the financial sector of most countries globally. These fraudulent transactions have led to loss of huge sums of money to financial institutions, as well as to their depositors. The current crises in the financial sector of Ghana, especially among the Deposit Taking Institutions, has largely been attributed to connected lending and lending to affiliated party institutions which are fraudulent corporate governance issues. This study, therefore, aims to assess the determinants of fraud among management staffs in the banking sector of Ghana.
Design/methodology/approach
This study is anchored on the fraud diamond theory (FDT). Primary data was collected from 120 management staffs of the remaining 23 universal banks in Ghana. Estimation was done using structural equation modelling with maximum likelihood estimation technique.
Findings
Fraudulent activities in the banking sector of Ghana are driven by opportunities, pressure, rationalization and capacity to commit fraud, with capacity being the dominant factor.
Practical implications
The regulator should strictly enforce the structure of shareholding as directed in the corporative governance directive to prevent ownership of a bank in the name of one person or a family, which gives high capacity to the Chief Executive Officers to misuse funds. The offenders should also be punished. Finally, the regulator should improve their supervision.
Originality/value
This study places the FDT into the context of the current banking crises of Ghana. The study therefore goes a long way to guide the regulator and government to formulate and implement policies on shareholding structure of banks.
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Dwi Marlina Wijayanti, Yayu Putri Senjani and Wilda Farah
This study aims to explore personal and organizational factors in mitigating fraud intention through machiavellian personality, altruistic personality, religiousity…
Abstract
Purpose
This study aims to explore personal and organizational factors in mitigating fraud intention through machiavellian personality, altruistic personality, religiousity, whistleblowing system, and accounting firm size. Companies will suffer greater losses if they cannot prevent fraudulent practices. The fraud hexagon theory is considered effective in detecting the possibility of fraud and the tendency of fraud motivated by personal and organizational factors. Therefore, the researchers examined several factors, including Machiavellian, altruism, religiosity, whistleblowing system and accounting firm size in mitigating fraud intention.
Design/methodology/approach
This study used a self-administered survey of accountants in Indonesia. The accountants were selected as the sample because the accounting profession has considerable potential in committing fraud. To avoid common method bias, the authors performed ex ante and ex post on the questionnaire. This research model was tested using structural equation modeling-partial least square.
Findings
The results revealed that personal factors in the form of Machiavellian, altruism and religiosity had a direct impact on decreasing fraud intention. In addition, whistleblowing system and accounting firm size were able to promote the effectiveness of fraud mitigation.
Research limitations/implications
This study uses one profession, namely, accountants, so it requires further research to see the similarity of results in other professions.
Practical implications
The results contribute to managerial decision-making. Companies should include personal tests during employee recruitment because personal factors are the key to determining individual fraud behavior.
Social implications
Combining personal factors and organizational factors can promote the success of the internal control system, so that individuals are encouraged to do ethical things.
Originality/value
This study combines personal and organizational factors in mitigating fraud, so as to know accurately which factors are most capable of mitigating fraud.
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Mohd Azril Rezza Mohd Razmin, Amri Mohamad and Maheran Zakaria
This study aims to investigate the factors that influence asset misappropriation fraud among police officers in the Internal Security and Public Order (Malay: Keselamatan Dalam…
Abstract
Purpose
This study aims to investigate the factors that influence asset misappropriation fraud among police officers in the Internal Security and Public Order (Malay: Keselamatan Dalam Negeri dan Ketenteraman Awam [KDNKA]) Department, Royal Malaysian Police (RMP).
Design/methodology/approach
Primary data were collected from a questionnaire-based survey and the data were analysed using descriptive analysis, correlation analysis and multiregression.
Findings
The element of pressure was found to have a negative relationship with asset misappropriation fraud. This result shows the uniqueness of the KDNKA Department in the RMP. The other three elements are found to have a significant positive relationship with asset misappropriation fraud.
Practical implications
This study’s findings can aid academicians in gaining a better understanding of the literature surrounding fraud diamond theory and aid the policymakers in recognizing the signs and possibilities of asset misappropriation fraud in public agencies.
Originality/value
To the best of the authors’ knowledge, this is the first study that uses the KDNKA Department which is the second largest department in RMP as a population in fraud study.
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Godfred Matthew Yaw Owusu, Theodora Aba Abekah Koomson and George Nana Agyekum Donkor
This paper aims to review corporate fraud, as a concept, and the emerging research trends in corporate fraud research from 1957 to 2022 using bibliometric analysis techniques.
Abstract
Purpose
This paper aims to review corporate fraud, as a concept, and the emerging research trends in corporate fraud research from 1957 to 2022 using bibliometric analysis techniques.
Design/methodology/approach
A total of 7,750 publications from the Scopus database were first assessed using performance analysis to explore the descriptive nature of the bibliographic data, and subsequently, citation, co-citation, co-occurrence and bibliographic coupling analyses were conducted using the VOSviewer software.
Findings
The results indicate there has been increasing growth in fraud research over the years, especially since the global corporate scandals of 2008. Although fraud is a global issue, the results suggest that most extant studies originate from developed economies, with a high level of collaboration amongst scholars in these countries. In addition, the co-occurrence analysis indicates that research into corporate fraud has largely focused on its determinants and corruption. The determinants identified are further clustered in the paper as individual, organizational and national-level factors.
Practical implications
The findings should inform practitioners and policymakers of the state of knowledge on corporate fraud which could be useful in developing strategies and policies to mitigate its occurrence.
Social implications
The study points to the need for research collaborations among scholars in developing economies to increase investigations into the occurrences of fraud.
Originality/value
To the best of the authors’ knowledge, this is the first study to holistically assess the intellectual structure of corporate fraud studies from its inception and the trends over time.
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Godfred Matthew Yaw Owusu, Theodora Aba Abekah Koomson, Stanley Agbenya Alipoe and Yusuf Ahmed Kani
This paper aims to investigate the views of employees on the motives behind frequently reported fraudulent activities at the workplace. Using the fraud triangle theory (FTT) as…
Abstract
Purpose
This paper aims to investigate the views of employees on the motives behind frequently reported fraudulent activities at the workplace. Using the fraud triangle theory (FTT) as the theoretical lens, the study examines the effect of pressure, opportunity and rationalization on fraudulent acts by employees at the workplace.
Design/methodology/approach
The study follows a correlational quantitative approach using questionnaires as the main data collection tool. A total of 243 valid responses from employees working in different state-owned enterprises in Ghana were used in the empirical analysis. The hypothesized relationships of the study were tested using the partial least square-structural equation modelling technique.
Findings
The results from the structural analysis showed that pressure, rationalization and opportunity are important in explaining why employees engage in fraudulent activities at the workplace.
Originality/value
The findings do not only provide empirical support for the applicability of the FTT in the Ghanaian context but most importantly offer some useful insights into the fraud discourse from the public sector workers’ perspective.
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