The fraud triangle – an alternative approach

Purpose In recent years, Public Accountability and Integrity have been matters of growing attention, both in the public and private sector, as citizens demand value for money entrusted to the governments through their taxes. In addition, in many countries, after the recent recession, government budgets and corporate returns have been reduced. Many corporate scandals have occasionally become known and have had a great impact on confidence in the market. Even worse, after the pandemic of COVID-19, «bare and exacerbated massive preexisting problems in the world’s economic, social and security order, threatens to push up to 100 million people into extreme poverty in 2020, struck at a time of dwindling trust in representative governance» (UNDP, 2020). The funds of organizations in the private and public sector have been shrinking, whereas the situational pressures of fraud are increased. In this context, Dorris, President and CEO of the ACFE warns for explosion of fraud in the coming years and reminds that during the 2008 economic, companies cut-off, non-revenue generating activities, such as the internal audit and the compliance departments leaving them exposed to fraud. Therefore, organizations have to do more with less. The purpose of this paper is to present the development of the fraud theory on the management’s perspective aiming to contribute to the efficient development of anti-fraud mechanisms Design/methodology/approach Having identified the fraud theory developed so far, we provide a framework for the fraud risk management. Findings This paper incorporates cost/benefits considerations, practical considerations and empirical evidence on fraud. Originality/value This paper provides valuable information to enable the management, who has the primary responsibility to prevent and detect fraud, to disclaim responsibility by broadening their understanding of fraud theory.

An Effective Model for Fraud Risk Management in Mitigating Telecommunication Fraud Incidences

In the context of Malaysia, the most common types of cyber attacks are denial of service, intrusion attempts, spam, vulnerability report, fraud, malicious code, and content-related attacks as reported by Cyber Security Malaysia. However, since 2011, cyber attacks such as intrusion attempts, denial of service and spam are decreasing steadily as a result of security measures that have been taken by companies or internet users. Nevertheless, cyber attacks which are steadily increasing are cyber harassment, intrusion and fraud. Approximately 5,328 fraud incidences were reported in 2011 while in 2020, the number of cases rose to 7,593 cases. Out of these cyber attacks in Malaysia, the most proliferating ones have been identified as fraud incidences. Thus, it is highly needed to come up with and propose the best fraud risk management strategy to handle fraud incidences among internet users and internet providers through the utilization of business intelligence tools, and quality enhancement via quality systems in place, quality information, and quality users. With these tools in hand, it is hoped that the proposed model will serve as a framework to mitigate and/or prevent the occurrence of fraud incidences.

Fake Product Monitoring and Removal for Genuine Product Feedback

A customer’s decision to purchase a product or service are primarily influenced by online reviews. Customers use online reviews, which are valuable sources of information to understand the public opinion on products and/or services. Dependability on online reviews can give rise to the potential concern that violator could give deceitful reviews in order to synthetically promote or decry products and services. This practice is known as Opinion Spam, where spammers manipulate reviews by making fake, untruthful, or deceptive reviews to get profit and boost their products, and devalue a competitor’s products. In order to tackle this issue, we propose to build a fraud risk management system and removal model. This captures fraudulent transactions based on user behaviors and network, analyses them in real-time using Data Mining, and accurately predicts the suspicious users and transactions. In this system, we use two algorithms NLP and TF-IDF to differentiate between fake and genuine reviews or feedback received by the customers

Strategic management of credit card fraud: stakeholder mapping of a card issuer

Purpose The purpose of this paper is to set a framework for strategic management of credit card fraud, by mapping its stakeholders within a card issuer and outlining its ideal strategies. Design/methodology/approach The objectives are attained via case study. Primary data was collected by interviewing two fraud risk managers at the card issuer, while secondary data was collected by gathering all investor reports released from 2015 to 2019 by the financial institution. All data were submitted to content analysis and further analyzed using Mendelow’s power/interest matrix. Findings Seven groups of stakeholders were identified, the expectations of each group uncovered and KPIs proposed to measure how well the financial institution meets those expectations. Strategies to deal with and prioritize groups were outlined, while highlighting the need for repositioning stakeholders identified as potential blockers or facilitators of strategic initiatives and pressure factors in times of low performance. Practical implications Strategic management of stakeholders is essential for fraud risk managers and researchers to understand what is relevant and what is not. This paper creates a framework for addressing managerial and academic efforts based on stakeholders mapping. Further initiatives in research and practice should consider the following question: “Which stakeholder expectation will be better satisfied?” In case the answer is “none”, it is advised that the initiative be reconsidered. Originality/value Previous literature focusses mostly on the technical challenges, leaving a gap in both literature and practice for using Strategic Management. For the first time in literature, this research combines theories and terminologies from fraud risk management and strategic management.

Fraud Risk Management in Banks

White collar crimes refer to the criminal activities by a professional holding a responsible position in the organization. Banking frauds are one of the most pronounced forms of white collar crimes. These frauds impact the reputation of the bank and also effects its financial sustainability. The chapter entails the frauds that happen in banks and identifies reasons for the failure of banks to prevent such frauds. The author pinpoints the best practices in developing fraud prevention frameworks and emphasizes the importance of corporate governance in preventing such frauds. Best practices and future trends are also identified that are important to prevent and detect banking frauds.

Responsibility of internal auditors in the management of fraud risks

When fraud occurs in the organization, many wonder - where was the internal audit. The aim of this work is to determine what are the responsibilities of internal audit in the management of fraud risks and what regulations define them. Internal Auditing Standards and the Code of Ethics for Internal Auditors are places where the responsibility of internal auditors for managing fraud risks is established, and the Internal Audit Charter is a document that authorizes internal auditors. The internal audit function plays an important role in the overall monitoring of fraud risk management programs. This is primarily evident from the independent assurance that the internal audit function provides to the Board and management that existing fraud risk management controls are adequately planned and efective.

The Influence of Fraud Risk Management on Fraud Occurrence in Kenyan listed Companies

This study sought to establish the influence of fraud risk management practices in regard to preventive, detective and corrective controls on the level of fraud occurrence on listed firms in Kenya. This is because limited research had been conducted in the context of listed firms in Kenya and limited attention paid on how corrective controls influences fraud occurrence. A causal research design was applied. Data was obtained from a sample of 275 senior managers by using structured questionnaires. The findings revealed that only preventive and corrective controls had a profound negative effect on the degree of fraud occurrence on listed companies in Kenya. Conversely, detective controls did not considerably reduce fraud occurrence on listed companies in Kenya. The key implication of the findings noted by this study is that the proper implication of the most effectual anti-fraud measures can only be realized when the management are committed to do so. Additionally, corrective controls must be seriously looked into as an effective strategy of curbing fraud since they indeed are instrumental in curbing fraud. Future studies should be extended to the public sector in regard to the government ministries and the distinctive partitions of the private sector such as the insurance, real estate, manufacturing, automobile sectors among others respectively. Moreover, future studies can explore how firm size in terms of asset size or employee size moderates the relationship between fraud risk management practices and the level of fraud occurrence.