Fraudulent Financial Reporting: An Empirical Analysis in Malaysia

2011 ◽  
Author(s):  
Sherliza Puat Nelson
Keyword(s):  
Empirical Analysis ◽  
Financial Reporting ◽  
Fraudulent Financial Reporting

Fraud of Financial Statements at Listed Enterprises on Ho Chi Minh City Securities Department

2018 ◽  
Vol 34 (4) ◽  
Author(s):  
Nguyen Tien Hung ◽  
Huynh Van Sau
Keyword(s):  
New York ◽  
Financial Reporting ◽  
Financial Statements ◽  
Financial Statement ◽  
Viet Nam ◽  
Fraud Triangle ◽  
Fraudulent Financial Reporting ◽  
Financial Statement Fraud ◽  
Corporate Fraud ◽  
Two Factors

The study was conducted to identify fraudulent financial statements at listed companies (DNNY) on the Ho Chi Minh City Stock Exchange (HOSE) through the Triangular Fraud Platform This is a test of VSA 240. At the same time, the conformity assessment of this model in the Vietnamese market. The results show that the model is based on two factors: the ratio of sales to total assets and return on assets; an Opportunity Factor (Education Level); and two factors Attitude (change of independent auditors and opinion of independent auditors). This model is capable of accurately forecasting more than 78% of surveyed sample businesses and nearly 72% forecasts for non-research firms.  Keywords Triangle fraud, financial fraud report, VSA 240 References Nguyễn Tiến Hùng & Võ Hồng Đức (2017), “Nhận diện gian lận báo cáo tài chính: Bằng chứng thực nghiệm tại các doanh nghiệp niêm yết ở Việt Nam”, Tạp chí Công Nghệ Ngân Hàng, số 132 (5), tr. 58-72.[2]. Hà Thị Thúy Vân (2016), “Thủ thuật gian lận trong lập báo cáo tài chính của các công ty niêm yết”, Tạp chí tài chính, kỳ 1, tháng 4/2016 (630). [3]. Cressey, D. R. (1953). Other people's money; a study of the social psychology of embezzlement. New York, NY, US: Free Press.[4]. Bộ Tài Chính Việt Nam, (2012). Chuẩn mực kiểm toán Việt Nam số 240 – Trách nhiệm của kiểm toán viên đối với gian lận trong kiểm toán báo cáo tài chính. [5]. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.[6]. Võ Hồng Đức & Phan Bùi Gia Thủy (2014), Quản trị công ty: Lý thuyết và cơ chế kiểm soát, Ấn bản lần 1, Tp.HCM, Nxb Thanh Niên.[7]. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman independence on corporate fraud. Managerial Finance 26 (11): 55-67.[9]. Skousen, C. J., Smith, K. R., & Wright, C. J. (2009). Detecting and predicting financial statement fraud: The effectiveness of the fraud triangle and SAS No. 99. Available at SSRN 1295494.[10]. Lou, Y. I., & Wang, M. L. (2011). Fraud risk factor of the fraud triangle assessing the likelihood of fraudulent financial reporting. Journal of Business and Economics Research (JBER), 7(2).[11]. Perols, J. L., & Lougee, B. A. (2011). The relation between earnings management and financial statement fraud. Advances in Accounting, 27(1), 39-53.[12]. Trần Thị Giang Tân, Nguyễn Trí Tri, Đinh Ngọc Tú, Hoàng Trọng Hiệp và Nguyễn Đinh Hoàng Uyên (2014), “Đánh giá rủi ro gian lận báo cáo tài chính của các công ty niêm yết tại Việt Nam”, Tạp chí Phát triển kinh tế, số 26 (1) tr.74-94.[13]. Kirkos, E., Spathis, C., & Manolopoulos, Y. (2007). Data mining techniques for the detection of fraudulent financial statements. Expert Systems with Applications, 32(4), 995-1003.[14]. Amara, I., Amar, A. B., & Jarboui, A. (2013). Detection of Fraud in Financial Statements: French Companies as a Case Study. International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(3), 40-51.[15]. Beasley, M. S. (1996). An empirical analysis of the relation between the board of director composition and financial statement fraud. Accounting Review, 443-465.[16]. Beneish, M. D. (1999). The detection of earnings manipulation. Financial Analysts Journal, 55(5), 24-36.[17]. Persons, O. S. (1995). Using financial statement data to identify factors associated with fraudulent financial reporting. Journal of Applied Business Research (JABR), 11(3), 38-46.[18]. Summers, S. L., & Sweeney, J. T. (1998). Fraudulently misstated financial statements and insider trading: An empirical analysis. Accounting Review, 131-146.[19]. Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary accounting research, 13(1), 1-36.[20]. Loebbecke, J. K., Eining, M. M., & Willingham, J. J. (1989). Auditors experience with material irregularities – Frequency, nature, and detectability. Auditing – A journal of practice and Theory, 9(1), 1-28. [21]. Abbott, L. J., Park, Y., & Parker, S. (2000). The effects of audit committee activity and independence on corporate fraud. Managerial Finance, 26(11), 55-68.[22]. Farber, D. B. (2005). Restoring trust after fraud: Does corporate governance matter?. The Accounting Review, 80(2), 539-561.[23]. Stice, J. D. (1991). Using financial and market information to identify pre-engagement factors associated with lawsuits against auditors. Accounting Review, 516-533.[24]. Beasley, M. S., Carcello, J. V., & Hermanson, D. R. (1999). COSO's new fraud study: What it means for CPAs. Journal of Accountancy, 187(5), 12.[25]. Neter, J., Wasserman, W., & Kutner, M. H. (1990). Applied statistical models.Richard D. Irwin, Inc., Burr Ridge, IL.[26]. Gujarati, D. N. (2009). Basic econometrics. Tata McGraw-Hill Education.[27]. McFadden, D. (1974). Conditional Logit Analysis of Qualita-tive Choice Behavior," in Frontiers in Econometrics, P. Zarenm-bka, ed. New York: Academic Press, 105-42.(1989). A Method of Simulated Moments for Estimation of Discrete Response Models Without Numerical Integration," Econometrica, 54(3), 1027-1058.[28]. DA Cohen, ADey, TZ Lys. (2008), “Accrual-Based Earnings Management in the Pre-and Post-Sarbanes-Oxley Periods”. The accounting review.

The Influence of Potentially Fraudulent Reports on Audit Risk Assessment and Planning

2001 ◽  
Vol 76 (1) ◽  
pp. 59-80 ◽  
Author(s):  
D. Paul Newman ◽  
Evelyn Patterson ◽  
Reed Smith
Keyword(s):  
Financial Reporting ◽  
Planning Process ◽  
Dynamic Interaction ◽  
Fraudulent Financial Reporting ◽  
Expected Payoff ◽  
Audit Risk ◽  
Audit Planning ◽  
Inherent Risk ◽  
Risk Detection ◽  
Reported Earnings

We consider how auditors assess the risk of fraudulent financial reporting and plan their audit where a possibly fraudulent auditee anticipates the assessment and planning process. The auditor uses the auditee's (possibly fraudulent) earnings report to revise his beliefs about the likelihood of fraud when formulating an audit plan. We find that as underlying earnings increase, a fraudulent auditee increases reported earnings. In turn, as the auditee's reported earnings increase, the auditor increases audit effort. We also find that the auditee (who knows the auditor will use the report for audit planning) selects reports that increase his own expected payoff, relative to reports he would select if the auditor did not observe the report before finalizing the audit plan. By contrast, the auditor is no better off using the auditee's report for audit planning. Inherent risk, detection risk, and overall audit risk can increase when the auditor uses the auditee's report. Thus, because of the dynamic interaction between the auditor and auditee, procedures that aid in assessing audit risk may not reduce that risk or result in more efficient audits.

They Protect Us from Computer Fraud: Who Protects Us from Them? SafeNet, Inc.: A Case of Fraudulent Financial Reporting

2015 ◽  
Vol 30 (4) ◽  
pp. 353-372 ◽  
Author(s):  
Leisa L. Marshall ◽  
James Cali
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Stock Options ◽  
Governance Structure ◽  
Fraud Triangle ◽  
Fraudulent Financial Reporting ◽  
Corporate Governance Structure ◽  
Chief Operating Officer ◽  
Tone At The Top ◽  
Prevention Methods

ABSTRACT This case focuses on fraudulent financial reporting as related to the tone at the top, primarily the chief operating officer, Carole Argo, of SafeNet, Inc. (SafeNet). This case provides students a real-world example by which to apply basic fraud concepts including the fraud triangle, fraud prevention, and red flags (fraud symptoms). Students analyze SafeNet to identify deficiencies and prevention methods, from the perspective of COSO's (2013) Internal Control—Integrated Framework's internal control objectives, components, and principles. Students also analyze SafeNet's corporate governance structure by comparing SafeNet's Board of Directors and its subcommittees pre- and post-SOX. Students learn of stock options as a form of compensation. However, this case does not focus on the details of accounting for stock options. This case is appropriate for students with the financial accounting principles course background. This case was classroom tested in a basic fraud examination course and an internal auditing course. Students' responses in both courses support the use of the case as a learning tool.

The relationship between knowledge-based economy and fraudulent financial reporting

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abbas Koolivand ◽  
Mahdi Salehi ◽  
Meysam Arabzadeh ◽  
Hassan Ghodrati
Keyword(s):  
Financial Markets ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Fraudulent Financial Reporting ◽  
Content Type ◽  
Knowledge Based ◽  
Robust Testing ◽  
Knowledge Based Economy ◽  
The Relationship

Purpose This paper aims to assess the relationship between a knowledge-based economy and fraudulent financial reporting. Design/methodology/approach The study is descriptive-correlation based on published information from enlisted firms on the Tehran Stock Exchange during 2013–2019 with a sample of 178 firms (1,246 observations). The method used for hypothesis testing is linear regression using the panel data. Findings The results show that a knowledge-based economy is associated negatively and significantly with financial reporting. Moreover, robust testing has also examined the hypotheses (including fixed effects, OLS and t + 1) that confirmed the study’s preliminary results. Originality/value As the study was carried out in the emergent financial markets, like Iran, to figure out the relationship between knowledge-based economy and financial reporting, it can provide helpful information for the practitioners in this field.

Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable

2021 ◽  
Vol 5 (4) ◽  
pp. 01-12
Author(s):  
Andalia Andalia ◽  
Amiruddin Amiruddin ◽  
Grace T. Pontoh
Keyword(s):  
Regression Analysis ◽  
Financial Reporting ◽  
Internal Control ◽  
Sampling Method ◽  
Stock Exchange ◽  
Jel Classification ◽  
Fraudulent Financial Reporting ◽  
Factors Affecting ◽  
Effect Of Pressure ◽  
Analysis Technique

Objective - This study aims to examine and analyze the effect of pressure, opportunity, rationalization, ability and arrogance on fraudulent financial reporting with independent commissioners as the moderating variable. Methodology/Technique - The object of this research is all companies listed on the Indonesian Stock Exchange during 2019. The research sample was obtained through purposive sampling method and resulted in 215 companies. The analysis technique used is multiple regression analysis and Moderated Regression Analysis (MRA). Findings - The results show that pressure, opportunity, rationalization, ability and arrogance had a significant effect on fraudulent financial reporting. The results of the moderation regression analysis show that independent commissioners moderate the effect of pressure and arrogance on fraudulent financial reporting. Meanwhile, independent commissioners did not moderate opportunities, rationalization, and capacity for fraudulent financial reporting. Novelty - This research contributes to the pentagon fraud theory, which proves that the elements contained in this theory can be used as a basis for analyzing fraud committed by companies, and contributing to the company so that the company's internal control is improved and the presence of an independent board of commissioners is not only a fulfillment of the company's internal control. regulations made by the IDX. Type of Paper: Empirical. JEL Classification: G32, M21, M41, M42. Keywords: Pressure; Opportunities; Rationalization; Arrogance; Fraudulent Financial Reporting Reference to this paper should be made as follows: Andalia; Amiruddin; Pontoh, G.T. (2021). Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable, Accounting and Finance Review, 5(4): 01 – 12. https://doi.org/10.35609/afr.2021.5.4(1)

scholarly journals Pengaruh Kecurangan Laporan Keuangan terhadap Nilai Perusahaan: Ditinjau dari Perspektif Fraud Pentagon (Kasus di Indonesia)

2020 ◽  
Vol 20 (1) ◽  
pp. 121
Author(s):  
Desi Elviani ◽  
Syahril Ali ◽  
Rahmat Kurniawan
Keyword(s):  
Financial Reporting ◽  
Firm Value ◽  
Stock Exchange ◽  
Sample Selection ◽  
Financial Statement ◽  
Fraudulent Financial Reporting ◽  
Financial Statement Fraud ◽  
Company Value ◽  
Negative Effect ◽  
Five Elements

This study aims to examine how the influence of fraudulent financial reporting on firm value is viewed from the perspective of a pentagon fraud with a sample of 71 companies from the infrastructure, utilities and transportation sectors in the Indonesia Stock Exchange in 2014-2018. The sample selection used was purposive sampling method. Company value is measured by price book value, financial statement fraud is measured by fraud-score models. There are two variables that have a positive and significant influence, namely the opportunity and arrogance variables, the two variables present two of the five elements of pentagon fraud, where as the three variables, pressure, rasionalization, competence, do not affect the fraudulent financial reporting. The results of this study have proven that fraudulent financial reporting has a negative effect on firm value.

scholarly journals Pengaruh Elemen-Elemen Fraud Pentagon Terhadap Kecurangan Laporan Keuangan

2020 ◽  
Vol 2 (4) ◽  
pp. 3405-3418
Author(s):  
Alfamet Randa ◽  
Sany Dwita
Keyword(s):  
Logistic Regression ◽  
Regression Analysis ◽  
Data Analysis ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Empirical Studies ◽  
Sampling Technique ◽  
Fraudulent Financial Reporting ◽  
Real Estate Sector ◽  
Final Sample

This study aims to determine the effect of pentagon fraud’s theory in detecting fraudulent financial reporting empirical studies on companies in property and real estate sector in Indonesia listed on the Stock Exchange in 2014-2018. The sampling technique used purposive sampling with the final sample of 18 companies. Data analysis used in this research is logistic regression analysis. The result of this research showed that : Pressure (ROA), Opportunity (BDOUT), Competence (DCHANGE) and Arogance (CEOPIC) have no significant effect on fraudulent financial reporting. While the Rationalization (Change of Auditor) has a significant effect on fraudulent financial reporting.

scholarly journals Fraud Pentagon Model for Detecting Fraudulent Financial Reporting in Banking Sector

2020 ◽  
Vol 8 (6) ◽  
pp. 2832-2838
Keyword(s):  
Financial Reporting ◽  
Banking Sector ◽  
Influencing Factor ◽  
Secondary Data ◽  
Least Square ◽  
Fraudulent Financial Reporting ◽  
Ordinary Least Square ◽  
Independent Variables ◽  
Section Data ◽  
Recent Trends

Many discussions and opinions of experts who produce endangement or tools to detect the possibility of fraud in reporting financial performance. One of the most recent trends is the Pentagon fraud approach. Pentagon is a form that has five sides, there are five categories of causes of fraud in pentagon fraud, namely: pressure, opportunity, rationalization, competence and arrogance. Our research takes samples from banks, because the sector is the most common case of fraud. We made this quantitative secondary data-based research to have written evidence for reference in banking sectors. We use cross section data from 2016 year ends up to 2018. We own 35 samples from three years period, the total of 105 samples. We use ordinary least square using nine independent variables and one dependent variable. After conducting this research, we found that opportunity is the most influencing factor for company in banking sector to do fraud. While the others factor has no significant effect.

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