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1 – 10 of 391Although 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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Reem Zaabalawi, Gregory Domenic VanderPyl, Daniel Fredrick, Kimberly Gleason and Deborah Smith
The purpose of this study is to extend the Fraud Diamond Theory to celebrity Special Purpose Acquisition Companies (SPACs) and investigate their post-Initial Public Offering (IPO…
Abstract
Purpose
The purpose of this study is to extend the Fraud Diamond Theory to celebrity Special Purpose Acquisition Companies (SPACs) and investigate their post-Initial Public Offering (IPO) stock market performance.
Design/methodology/approach
After obtaining a sample of celebrity SPACs from the Spacresearch.com database, fraud risk characteristics were obtained from Lexis Nexus searches. Buy and hold abnormal returns were calculated for celebrity SPACs versus a small-cap equity benchmark for time intervals after IPO, and multiple regression analysis was performed to examine the relationship between fraud risk features and post-IPO returns.
Findings
Celebrity SPACs exhibit Fraud Diamond characteristics and significantly underperform a small-cap stock portfolio on a risk-adjusted basis after IPO.
Research limitations/implications
This study only examines celebrity SPACs that conducted IPOs on the NYSE and NASDAQ/AMEX and does not include those that are traded on the Over the Counter Bulletin Board (OTCBB).
Practical implications
Celebrity endorsement of SPAC vehicles attracts investors who may not be properly informed regarding the risk characteristics of SPACs. Accordingly, investors should be warned that celebrity SPACs underperform a small-cap equity portfolio and exhibit significant elements of fraud risk.
Social implications
The use of celebrity endorsement as a marketing device to attract investment in SPACs has regulatory implications.
Originality/value
To the best of the authors’ knowledge, this paper is the first to examine the fraud risk characteristics and post-IPO performance of celebrity SPACs.
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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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Nor Balkish Zakaria, Muhammad Farhan Nordin, Allezawati Ismail, Nurul Huda Ahmad Shukri and Elif Baykal
This study departed from the aim to progress Malaysia as a high-income nation in 2025 via decent work and economic growth (Sustainable Development Goal 8). Thus, this study aims…
Abstract
Purpose
This study departed from the aim to progress Malaysia as a high-income nation in 2025 via decent work and economic growth (Sustainable Development Goal 8). Thus, this study aims to examine the effects of demographic, experience and organisational factors on the ethical integrity of local enforcement officers from self-proclaim and colleague perception perspectives.
Design/methodology/approach
The data of this study was collected from Pusat Latihan Penguatkuasa Selangor (PULAPES), a training centre for local enforcement officers in Selangor. Based on a survey in 2019, this study used primary data based on a scenario-based questionnaire survey with a total sample of 535 respondents.
Findings
From a self-proclaim perspective, the results show that secondment and training factors have a positive relationship with the ethical integrity of local enforcement officers. From a colleague perception perspective, the results indicate that the secondment factor has a positive relationship with ethical integrity. In contrast, the officer rank factor has a negative relationship with the ethical integrity of local enforcement officers.
Practical implications
This research seeks to develop new theories or refine existing ones to explain how diverse circumstances affect law enforcement ethics. Learning people’s habits through observation and consequences like rewards or punishments impact behaviour recurrence are suggested. Law enforcement ethics can be examined by examining how peers, supervisors and organisational culture shape officers’ ethics.
Social implications
The finding of this study could serve to evaluate training programmes or rewards and punishments for ethical behaviour including how accountability and community involvement aid to promote law enforcement ethics.
Originality/value
The survey results of this study are based on local enforcement officers’ ethics that serve to aid in illuminating the elements which affect ethical behaviour among law enforcement personnel and identify the tactics for fostering ethical behaviour.
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No country is free from financial crime issues. Therefore, this paper aims to discover how to control financial crime from the perspective of national culture.
Abstract
Purpose
No country is free from financial crime issues. Therefore, this paper aims to discover how to control financial crime from the perspective of national culture.
Design/methodology/approach
This study conducted a bibliometric approach and systematic literature review analysis of 47 publications in the Scopus database.
Findings
Bibliometric and content analyses show that national culture is more often associated with tax evasion, money laundering and corruption. The role of national culture is less investigated currently in the schemes of financial statement crime, workplace fraud and cybercrime. Overall, the study concludes financial crime can be prevented by developing a culture that supports anti-fraud measures. These include individualized country profiles, feminism, low power distance, tolerance for uncertainty, short-term orientation and restraint.
Originality/value
This research provides clear knowledge of the role of the six dimensions of national culture in fighting financial crime. Finally, this study is also valuable for decision-making in designing more effective financial crime prevention programs.
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Domenico Campa, Alberto Quagli and Paola Ramassa
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Abstract
Purpose
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Design/methodology/approach
This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.
Findings
The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.
Research limitations/implications
This study outlines directions for future accounting research on fraud.
Practical implications
The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.
Originality/value
This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.
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This study aims to examine how auditors perceive the influence of crucial fraud prevention factors in deterring financial statement fraud within the corporate sector…
Abstract
Purpose
This study aims to examine how auditors perceive the influence of crucial fraud prevention factors in deterring financial statement fraud within the corporate sector. Additionally, this research explores the mediating effect of fraud awareness in elucidating the impact of ethical leadership and internal control systems on preventing financial statement fraud.
Design/methodology/approach
The study used an online survey, targeting a sample of 141 professionally qualified auditors with at least one year of practical experience in the field. The researchers used “Structural Equation Modeling (SEM)” to examine relationships between latent variables using partial least squares structural equation modeling. The study investigated the impact of whistleblowing systems, fraud awareness, ethical leadership, internal control systems and corporate governance on fraud prevention.
Findings
This research finding provides evidence to the corporate sector by establishing the significance of fraud awareness as the most influencing factor in preventing financial statement fraud. Furthermore, the combined explanatory variables account for 77.4% of the overall variance in financial statement fraud prevention. The study reveals a partial mediation effect of fraud awareness on the relationship between the internal control system and financial statement fraud prevention.
Practical implications
This research finding may assist in developing an effective fraud prevention programme to mitigate fraud instances and improve financial reporting quality. In the corporate sector, each organisation should clearly specify the policies on whistleblowing systems, fraud awareness training, internal control systems and corporate governance. To foster a comprehensive fraud prevention programme, the leaders should enforce these policies with employee support.
Originality/value
This research integrated crucial elements to develop a new theoretical framework for investigating financial statement fraud prevention within the corporate context. Accordingly, this research framework provides a more in-depth explanation of preventing financial statement fraud from an auditor’s perspective. Additionally, this research is the first to explore the mediating role of fraud awareness in influencing the effectiveness of the internal control system in preventing financial statement fraud.
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The purpose of this study is to explore how the risk of management motives for fraud can be assessed in external audits.
Abstract
Purpose
The purpose of this study is to explore how the risk of management motives for fraud can be assessed in external audits.
Design/methodology/approach
Semi-structured interviews were conducted with 26 experienced external auditors to explore their perspectives on the methods they employ to assess the risk of management motives for fraud.
Findings
The study identifies six methods external auditors can use to assess management motives for fraud. It emphasises that assessing management motives requires auditors to go beyond understanding these motives and necessitates a sceptical and analytical mindset. Auditors need to identify the accounts most vulnerable to management manipulations, observe management attitudes and assess the credibility of management assertions. The auditors in this study highlight specific accounts frequently manipulated by management. Still, manual year-end journal entries are the most vulnerable to management manipulations as they are subject to fewer controls. They recommend increasing the sample size to 100% and assigning more experienced staff, particularly, those with qualifications in fraud examination or anti-fraud training, to audit these vulnerable accounts thoroughly. They also provided examples of how auditors can identify management motives for fraud, observe management attitudes and assess the credibility of management assertions.
Practical implications
Audit standards (e.g. ISA 240, SAS99) lack explicit guidance on assessing management motives for fraud, but auditors are required to consider it in fraud risk assessment. This study proposes guidance recommendations to improve auditors' ability to assess this risk, which could be integrated into professional audit standards and training materials to improve auditors' professional scepticism, ability to challenge management and skills in fraud risk assessment.
Originality/value
Assessing the risk of management motives for fraud in external audits has received limited attention in the literature. To the best of the authors’ knowledge, this study is the first to address this knowledge gap.
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Kapil Bansal, Aseem Chandra Paliwal and Arun Kumar Singh
Technology advancement has changed how banks operate. Modernizing technology has, on the one hand, made it simpler for banks to do their daily business, but it has also increased…
Abstract
Purpose
Technology advancement has changed how banks operate. Modernizing technology has, on the one hand, made it simpler for banks to do their daily business, but it has also increased cyberattacks. The purpose of the study is to to determine the factors that have the most effects on online fraud detection and to evaluate the advantages of AI and human psychology research in preventing online transaction fraud. Artificial intelligence has been used to create new techniques for both detecting and preventing cybercrimes. Fraud has also been facilitated in some organizations via employee participation.
Design/methodology/approach
The main objective of the research approach is to guide the researcher at every stage to realize the main objectives of the study. This quantitative study used a survey-based methodology. Because it allows for both unbiased analysis of the relationship between components and prediction, a quantitative approach was adopted. The study of the body of literature, the design of research questions and the development of instruments and procedures for data collection, analysis and modeling are all part of the research process. The study evaluated the data using Matlab and a structured model analysis method. For reliability analysis and descriptive statistics, IBM SPSS Statistics was used. Reliability and validity were assessed using the measurement model, and the postulated relationship was investigated using the structural model.
Findings
There is a risk in scaling at a fast pace, 3D secure is used payer authentication has a maximum mean of 3.830 with SD of 0.7587 and 0.7638, and (CE2).
Originality/value
This study focused on investigating the benefits of artificial intelligence and human personality study in online transaction fraud and to determine the factors that affect something most strongly on online fraud detection. Artificial intelligence and human personality in the Indian banking industry have been emphasized by the current research. The study revealed the benefits of artificial intelligence and human personality like awareness, subjective norms, faster and more efficient detection and cost-effectiveness significantly impact (accept) online fraud detection in the Indian banking industry. Also, security measures and better prediction do not significantly impact (reject) online fraud detection in the Indian banking industry.
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Mianzhi Yang, Qing Hui, Qingru Yang, Mengwei Fan and Xin Li
China has recently introduced a new audit law that aims to increase the scope of audit supervision and raise the standards for preventing risks in auditing national public…
Abstract
Purpose
China has recently introduced a new audit law that aims to increase the scope of audit supervision and raise the standards for preventing risks in auditing national public projects. This paper presents a systematic research study on the causes of audit risks in national public projects and discusses the process by which these causes contribute to the emergence of such risks. Furthermore, the paper investigates the core risk sources in various types of national construction project audit. This paper aims to provide theoretical support for auditors of national construction projects in risk avoidance when conducting audits.
Design/methodology/approach
In this study, the authors carefully selected five national public audit projects from China and performed a comprehensive analysis of 85 relevant audit documentation. The textual analysis was conducted using Nvivo12 software, and the grounded theory approach was adopted for generalization purposes.
Findings
Based on the research results, the findings suggest that there are five key causes contributing to the audit risk of national construction projects: professional competence, risk awareness, management capacity, level of attention and deliberate fraud. The most critical factor identified is management capability, with 59.93% of the data supporting this view. This conclusion was based on an analysis of state-owned enterprises, administrative organs and public institutions. Building upon this, a framework titled “the mechanism of audit risk factors with management capability as the core” was constructed.
Originality/value
This paper employs qualitative analysis methods to examine national construction projects in China, contributing new literature to the theoretical study of audit risk management. The article also provides practical recommendations for auditors on how to mitigate audit risks and improve the quality of audit services in national project governance.
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