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Article
Publication date: 9 March 2020

Wanting Lu and Xiaokang Zhao

The purpose of this paper is to start with the background of the construction of the M-score model, find the variables that can represent the fraud characteristics of…

Abstract

Purpose

The purpose of this paper is to start with the background of the construction of the M-score model, find the variables that can represent the fraud characteristics of Chinese companies, and use the data of Chinese A-share listed companies to modify the M-score model.

Design/methodology/approach

In this paper, the fraud behavior of Chinese enterprises that M-score cannot detect is summarized as the basis of adding variables. Then, based on the data of Chinese listed companies, a modified M-score model including nine variables is constructed by the logistic regression method based on Wald.

Findings

Based on the original 8 variables of M-score, this paper adds 10 new variables that can represent the fraud characteristics of Chinese listed companies, and finally, constructs a modified M-score model with 9 variables. Results indicated that indexes such as gross profit margin, fixed assets depreciation rate, equity concentration and audit opinion can characterize the financial fraud of Chinese listed companies.

Practical implications

The modified M-score model based on the characteristics of Chinese enterprises’ fraud is more suitable for Chinese market, which can help investors avoid fraud risks, protect their own rights and interests and reduce losses.

Originality/value

Starting from the background of the model, this paper looks for variables that can characterize the characteristics of fraud in Chinese listed companies. Then, subdivides the research samples into specific fiscal years in which fraud occurs, so that the modified M-score model can be more suitable for the Chinese market.

Details

Journal of Financial Crime, vol. 28 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 7 July 2020

Oluwatoyin Esther Akinbowale, Heinz Eckart Klingelhöfer and Mulatu Fikadu Zerihun

The purpose of this study is to develop an innovative approach of combating economic crime using the forensic accounting techniques.

Abstract

Purpose

The purpose of this study is to develop an innovative approach of combating economic crime using the forensic accounting techniques.

Design/methodology/approach

The approach considered the identification of the effective forensic accounting techniques from the available literature and also explored the anti-economic crime policy, capable of assisting in the combating of economic crime. This brought about the development of two conceptual models, which incorporate all the requirements for the implementation of forensic accounting and the integration of forensic accounting technique into the organizational control system for effective fraud mitigation.

Findings

The analysis of the literature review indicated that one of the drawbacks, which has continue to mitigate the implementation of forensic accounting as a tool for combating fraud is lack of a suitable framework. This was the major focal point of this work, which produced two simplified conceptual models suitable for effective fraud mitigation.

Research limitations/implications

This study is limited to the development of conceptual models for fraud mitigation only.

Practical implications

The simplified model can easily be adopted into the structure of an organization to provide a sustainable solution to mitigate fraud occurrences.

Originality/value

The novelty of this study lies in the development of two simplified conceptual models. The first model addressed the incorporation of forensic accounting into the organization structure while the second captured the detailed investigation and comprehensive data analysis processes of uncovering fraud. The development of conceptual models with all these peculiarities for fraud mitigation has not been widely reported by the existing literature.

Details

Journal of Financial Crime, vol. 27 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 October 2007

A.C. Venter

The high occurrence of procurement fraud requires the management of an enterprise, the risk manager of the enterprise and the internal auditor to address procurement fraud

Abstract

The high occurrence of procurement fraud requires the management of an enterprise, the risk manager of the enterprise and the internal auditor to address procurement fraud risks effectively within the enterprise risk management concept. The purpose of the article is to explain a procurement fraud risk management process which will serve as a comprehensive framework for enterprise risk managers and for internal auditors to limit the enterprise’s exposure to procurement fraud as far as possible. The study by Venter (2005) on which the article is based proposes a procurement fraud risk matrix which can be used to manage fraud risks within the procurement function efficiently. This matrix is based on the Committee of Supporting Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management ‐Integrated Framework which is specifically applied to address the procurement fraud risk problem.

Details

Meditari Accountancy Research, vol. 15 no. 2
Type: Research Article
ISSN: 1022-2529

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Article
Publication date: 30 October 2018

Jiali Tang and Khondkar E. Karim

This paper aims to discuss the application of Big Data analytics to the brainstorming session in the current auditing standards.

Abstract

Purpose

This paper aims to discuss the application of Big Data analytics to the brainstorming session in the current auditing standards.

Design/methodology/approach

The authors review the literature related to fraud, brainstorming sessions and Big Data, and propose a model that auditors can follow during the brainstorming sessions by applying Big Data analytics at different steps.

Findings

The existing audit practice aimed at identifying the fraud risk factors needs enhancement, due to the inefficient use of unstructured data. The brainstorming session provides a useful setting for such concern as it draws on collective wisdom and encourages idea generation. The integration of Big Data analytics into brainstorming can broaden the information size, strengthen the results from analytical procedures and facilitate auditors’ communication. In the model proposed, an audit team can use Big Data tools at every step of the brainstorming process, including initial data collection, data integration, fraud indicator identification, group meetings, conclusions and documentation.

Originality/value

The proposed model can both address the current issues contained in brainstorming (e.g. low-quality discussions and production blocking) and improve the overall effectiveness of fraud detection.

Details

Managerial Auditing Journal, vol. 34 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

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Article
Publication date: 11 May 2020

Vipin Khattri, Sandeep Kumar Nayak and Deepak Kumar Singh

Currency usage either in the physical or electronic marketplace through chip-based or magnetic strip-based plastic card becoming the vulnerable point for the handlers…

Abstract

Purpose

Currency usage either in the physical or electronic marketplace through chip-based or magnetic strip-based plastic card becoming the vulnerable point for the handlers. Proper education and awareness can only thrive when concrete fraud detection techniques are being suggested together with potential mitigation possibilities. The purpose of this research study is tendering in the same direction with a suitable plan of action in developing the authentication strength metric to give weightage marks for authentication techniques.

Design/methodology/approach

In this research study, a qualitative in-depth exploration approach is being adapted for a better description, interpretation, conceptualization for attaining exhaustive insights into specific notions. A concrete method of observation is being adopted to study various time boxed reports on plastic card fraud and its possible impacts. Content and narrative analysis are being followed to interpret more qualitative and less quantitative story about existing fraud detection techniques. Moreover, an authentication strength metric is being developed on the basis of time, cost and human interactions.

Findings

The archived data narrated in various published research articles represent the local and global environment and the need for plastic card money. It gives the breathing sense and capabilities in the marketplace. The authentication strength metric gives a supporting hand for more solidification of the authentication technique with respect to the time, cost and human ease.

Practical implications

The research study is well controlled and sufficient interpretive. The empirical representation of authentication technique and fraud detection technique identification and suggestive mitigation gives this research study an implication view for the imbibing research youths. An application and metric based pathway of this research study provides a smoother way to tackle futuristic issues and challenges.

Originality/value

This research study represents comprehensive knowledge about the causes of the notion of plastic card fraud. The authentication strength metric represents the novelty of a research study which produced on the basis of rigorous documentary and classified research analysis. The creativity of the research study is rendering the profound and thoughtful reflection of the novel dimension in the same domain.

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Book part
Publication date: 9 December 2020

Jeremy Lee and Alexey Nikitkov

Consumption taxes are an integral part of government revenue in countries around the world and are often subject to consumer evasion. The rapid rise of electronic commerce…

Abstract

Consumption taxes are an integral part of government revenue in countries around the world and are often subject to consumer evasion. The rapid rise of electronic commerce has exacerbated this problem as cross-border selling over the internet has enabled foreign businesses to sell and avoid collection and remittance of tax on their sales.

In this paper, we search for the solution to this problem through the analysis of three tax collection models: vendor, financial institution, and internet service provider (ISP). In addition, we examine administrative tools that enable more effective collection as well as inducements for taxpayers or collection agents to carry out their responsibility.

We conclude that the ISP collection model is not feasible at this time. On the other hand, we find that the vendor model, when supplemented with appropriate administrative tools and inducements, and the financial institution model, both represent viable options for policymakers to consider.

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Article
Publication date: 2 July 2018

Vipin Khattri and Deepak Kumar Singh

This paper aims to provide information of parameters and techniques used in the automated fraud detection system during online transaction. With the increase in the use of…

Abstract

Purpose

This paper aims to provide information of parameters and techniques used in the automated fraud detection system during online transaction. With the increase in the use of online transactions, the concerns regarding data security have also increased. To tackle the frauds, lot of research has been done and plethora of papers are available on the related topics. The purpose of this paper is to provide the clear pathway for researchers to move in the direction of development of automated fraud detection system to prevent the fraud during online transaction.

Design/methodology/approach

This literature review analyses and compares the different types of techniques for detecting fraud during online transaction. An in-depth study of the most prominent journals has been done and the core methodology of the papers has been presented. This article also shed some light on different types of parameters used in fraud detection techniques during online transaction.

Findings

There are vast varieties of various fraud detection techniques, and every technique has completed task in its own way. After studying approximately 41 research papers, 14 books and four reports, in total 30 parameters have been identified and a detailed study of the parameters has been presented. The parameters are also listed with their details that how these parameters are used in the security system for detecting online transaction fraud.

Research limitations/implications

This paper provides empirical insight about the parameters and their prominence in the development of automated fraud detection security system of online transaction. This paper encourages the researchers to development of improved fraud detection system.

Practical implications

This paper will pave the way for researchers to do a focused research on the fraud detection methodologies. The analysis will help in zeroing down the most prevalent topic of research in this field. The researchers will be able to understand the internal details of parameters and techniques used in the fraud detection systems. This literature also helps the research to think in a variety of ways that how these parameters will be used in the development of fraud detection system.

Originality/value

This paper is one of the most comprehensive reviews in its field. It tries and attempts to fill a void created because of lack of compilation of the laid fraud detection parameters.

Details

Journal of Financial Crime, vol. 25 no. 3
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 January 2012

Norm Archer

The purpose of this paper is to investigate consumer behaviour as it relates to identity theft and fraud.

Abstract

Purpose

The purpose of this paper is to investigate consumer behaviour as it relates to identity theft and fraud.

Design/methodology/approach

Using survey data, this paper models the relationship between past experience of consumers and their levels of concern, and derives the principal components that make up consumer behaviours.

Findings

The components are physical prevention measures, account monitoring, agency monitoring, password security, and risky behaviour avoidance. These components were found to be almost orthogonal, implying that consumers tend to “buy into” a particular component of behaviour. The proposed model of consumer behaviour, while statistically significant, did not have high predictive value.

Research limitations/implications

The survey data used were collected without reference to the model used in this paper, which limits the efficacy of the model.

Practical implications

Consumers use all the behaviours in one component without regard to other components. This can leave “holes” in consumer defence against identity theft and fraud. Consumer education on identity theft and fraud needs to stress that consumers need to employ all behaviours that can minimise risk and loss.

Originality/value

This paper puts forward an initial model of consumer behaviours as it relates to identity theft and fraud. The derivation of the orthogonal components of behaviour is a new and important finding.

Details

Journal of Financial Crime, vol. 19 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 8 July 2014

Louis de Koker

– This paper aims to investigate the purpose, reach and effectiveness of the customer identification framework of the Financial Action Task Force (FATF).

Abstract

Purpose

This paper aims to investigate the purpose, reach and effectiveness of the customer identification framework of the Financial Action Task Force (FATF).

Design/methodology/approach

The article draws on relevant research and documents of the FATF, the Basel Committee on Banking Supervision and the Alliance for Financial Inclusion to determine whether compliance with the standards and practices of the FATF would prevent anonymous usage of financial services.

Findings

The FATF’s identification principles, guidance and practices resulted in processes that are largely bureaucratic and do not ensure that identity fraud is effectively prevented. Strict identification requirements on the other hand may impact on financial inclusion, leaving the FATF with little leeway to raise its standards. There are potential solutions, but they are longer-term and partial in nature.

Originality/value

Current identification and verification practices affect the lives of millions of people around the globe. The measures are being enforced to ensure that users are appropriately identified. This article informs the debate by highlighting the weaknesses of the current approach.

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Book part
Publication date: 9 May 2012

James Lloyd Bierstaker, James E. Hunton and Jay C. Thibodeau

The current study examines the effect of fraud training on auditors' ability to identify fraud risk factors. This is important because most auditors have little or no…

Abstract

The current study examines the effect of fraud training on auditors' ability to identify fraud risk factors. This is important because most auditors have little or no direct experience with fraud; thus, research that investigates the potential effect of indirect experience through training is vitally important to fraud detection and audit quality. A total of 369 experienced auditors completed a complex audit simulation task that involved 15 seeded fraud risk red flags. A total of 143 auditors participated in a 30-minute training session focused specifically on fraud risk, while the remaining 226 auditors learned about general internal control risk during this time block. The results indicate that auditors with fraud training identified significantly more red flags and obtained greater knowledge about fraud risk than auditors who did not receive the training. Considering that the fraud training consumed only 30 minutes out of a 64-hour training session, the findings suggest that even modest exposure to fraud training is quite effective.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78052-758-1

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