Fraud risk factors and tendency to commit fraud: analysis of employees’ perceptions

2019 ◽  
Vol 35 (4) ◽  
pp. 545-557
Author(s):  
Jesi Rizky Anindya ◽  
Desi Adhariani
Keyword(s):  
Risk Factors ◽  
Sampling Method ◽  
Small Samples ◽  
Dominant Factor ◽  
Fraud Triangle ◽  
Fraud Prevention ◽  
Content Type ◽  
Unethical Conduct ◽  
Fraud Risk ◽  
Convenience Sampling

Purpose This study aims to determine the fraud risk factors perceived by employees to have the greatest influence on individuals committing fraud as an unethical conduct, as well as to analyze employees’ opinions on fraud prevention program. Design/methodology/approach The fraud risk factors in this study are based on the concept of the fraud triangle as developed by Donald Cressey, as well as examples of situations set out in SAS No. 99. The samples used in this study are company employees who have been selected using the convenience sampling method. Findings A survey of 109 employees reports that none of the three factors (pressure, opportunity and rationalization) has a significant influence on fraud. However, when comparing the factors, the pressure is considered to have the highest impact. In terms of fraud prevention, the employees suggest that it is extremely important to implement all prevention tools, especially with regard to the adequate segregation of duties. Research limitations/implications Limitations of this study in terms of method and small samples are expected to inform future studies to overcome the limitations by using other methods such as interview and by collecting more respondents to gather their perceptions and opinions. Originality/value This study contributed to the literature in confirming the pressure as the dominant factor and in confirming the importance of anti-fraud programs as suggested by the agency theory.

Fraud prevention initiatives in the Nigerian public sector

2018 ◽  
Vol 25 (2) ◽  
pp. 527-544 ◽  
Author(s):  
Rabiu Abdullahi ◽  
Noorhayati Mansor
Keyword(s):  
Public Sector ◽  
Structural Equation ◽  
Equation Modeling ◽  
Control Mechanisms ◽  
Fraud Triangle ◽  
Fraud Prevention ◽  
Content Type ◽  
The Public ◽  
The Government ◽  
Triangle Theory

Purpose Detecting and preventing fraud are challenging and risky tasks, especially in a fast developing economy such as Nigeria. The efforts become crucial in the government sectors, as they involve public’s trust and resources. The purpose of this study is to examine the relationships between the fraud incidence and the elements of fraud triangle theory (FTT) with the aim of combating current fraud outrages in the Nigerian public sector. Design/methodology/approach A survey was conducted and 302 questionnaires were distributed to the staff of the departments of accounting, internal auditing and investigation of ten selected ministries, departments and agencies of Kano State, Nigeria. Structural equation modeling (SEM) was used to analyze the data. Findings The study reveals a significant relationship between three elements of FTT and fraud incidences in the Nigerian public sectors (p-value < 0.001 for pressure and opportunity and p-value = 0.024 for rationalization). Practical implications The findings of the study are useful for forensic accountants and the Nigerian anti-graft bodies to enhance existing control mechanisms in fraud prevention initiatives. The research also contributes to bridge the gap in academic theory and empirical study related to FTT. Social implications Fraud scandals can cause public’s frustration, damage the reputation and integrity of the ruling government and result in negative image of the public sector. Originality/value Accordingly, the study suggests a salary scale reform (SSR) in the Nigerian public sector and improvement in fringe benefits to increase employees’ standard of living. The study concludes with recommendations to enhance fraud awareness and training programs to the government employees.

scholarly journals Fraud Risk Factors of Fraud Triangle and the Likelihood of Fraud Occurrence: Evidence from Malaysia

2014 ◽  
Vol 6 (1) ◽  
pp. 1-7 ◽  
Author(s):  
Shabnam Fazli Aghghaleh ◽  
Zakiah Muhammaddun Mohamed .
Keyword(s):  
Risk Factors ◽  
Risk Factor ◽  
Logistic Model ◽  
Audit Committee ◽  
Financial Statement ◽  
Fraud Triangle ◽  
Financial Statement Fraud ◽  
Fraud Risk ◽  
Available Information ◽  
Binary Logistic Model

The current research studies the usefulness of Cressey’s fraud risk factor framework adopted from SAS No. 99 to prevent fraud from occurring. In accordance with Cressey’s theory, pressure, opportunity and rationalization are existing when fraud occurs. The study suggests variables as proxy measures for pressure and opportunity, and test these variables using publicly available information relating to a set of fraud firms and a sample of no-fraud firms. Two pressure proxies and two opportunity proxies are identified and suggested to be significantly related to financial statement fraud. We find that leverage and sale to account receivable are positively related to the likelihood of fraud. Audit committee size and board of directors’ size are also linked to decrease the level of financial statement fraud. A binary logistic model based on examples of fraud risk factors of fraud triangle model measures the likelihood of financial statement fraud and can assist experts.

scholarly journals Financial Statement Fraud Risk Factors of Fraud Triangle: Evidence From Indonesia

2020 ◽  
Vol 11 (4) ◽  
pp. 36
Author(s):  
Hasni Yusrianti ◽  
Imam Ghozali ◽  
Etna Yuyetta ◽  
Aryanto Aryanto ◽  
Eka Meirawati
Keyword(s):  
Risk Factors ◽  
Financial Stability ◽  
Stock Exchange ◽  
Secondary Data ◽  
Financial Statement ◽  
Company Size ◽  
Fraud Triangle ◽  
Financial Statement Fraud ◽  
Fraud Risk ◽  
Industry Risk

The purpose of this study is to examine the risk factors that influencing financial statement fraud. Especially, it examines the influence of rationalization, pressure, and opportunity on the fraudulent financial statements and also examines the interaction effect of industry risk and company size on the relationship between rationalization, pressure, and opportunity on financial statement fraud. Secondary data were collected from Bloemberg Data Base, IDX and OJK RI. The population in this study is companies listed on the Indonesia Stock Exchange in the moving year from 2011 to 2017 and the sample was selected by companies that indicated financial statement fraud and those that did not indicate financial statement fraud. The company indicated by Fraud was collected from Bapepam and OJK RI. Data were tested using logistic regression analysis and different T-tests of 28 committed fraud companies and 28 companies that did not commit fraud. The results showed that only some variables had a significant effect on financial statement fraud, namely financial stability (ACHANGE), Financial Target (ROA), and the Nature of Industry (ARCHANGE). The results also show that company size and industry risk do not moderate the fraud factors on financial statement fraud. These results support the fraud triangle theory in explaining the phenomena of financial statement fraud.

Fraud Risk Factors of Cressey’s Fraud Triangle Theory: Evidence From Korea

2017 ◽  
Vol 32 (2) ◽  
pp. 291-314
Author(s):  
Bok－Hyun Cho ◽  
◽  
Young－Gyu Ahn ◽  
Keyword(s):  
Risk Factors ◽  
Fraud Triangle ◽  
Fraud Risk ◽  
Triangle Theory

The Disposition-Based Fraud Cycle

2013 ◽  
Vol 2 (2) ◽  
pp. 56-76 ◽  
Author(s):  
Vasant Raval
Keyword(s):  
Risk Factors ◽  
Empirical Evidence ◽  
Potential Role ◽  
Chief Executive ◽  
Financial Fraud ◽  
Fraud Triangle ◽  
Considerable Influence ◽  
Fraud Risk ◽  
The Past

This paper reviews the disposition-based fraud cycle (DFC) primarily from the perspective of financial frauds. It suggests that fraud as a human act represents an interaction between organism’s disposition and the circumstances he faces. The DFC model which maps financial fraud as a cycle driven by desire-belief connection is contrasted with the widely accepted paradigm called the Fraud Triangle (FT). A purpose of the analysis is to identify unique fraud-risk factors visible in the DFC model. Empirical evidence from the past studies is discussed to show relevance of the DFC model, and its potential role in preventing and detecting financial fraud. Although the model is applicable to all kinds of fraudulent acts, the focus of this study is on the powerful chief executive with considerable influence within the organization she leads.

A tale of two triangles: comparing the Fraud Triangle with criminology’s Crime Triangle

2015 ◽  
Vol 28 (1) ◽  
pp. 45-58 ◽  
Author(s):  
Grace Mui ◽  
Jennifer Mailley
Keyword(s):  
Management Strategies ◽  
Routine Activity Theory ◽  
Routine Activity ◽  
Future Research ◽  
Fraud Triangle ◽  
Content Type ◽  
Fraud Risk ◽  
Starting Point ◽  
Accounting Practitioners ◽  
Fraud Risk Management

Purpose – This paper aims to propose the application of the Crime Triangle of Routine Activity Theory to fraud events as a complement to the universally accepted Fraud Triangle. Design/methodology/approach – The application of the Crime Triangle is illustrated using scenarios of asset misappropriations by type of perpetrator: external perpetrator, employee, management and the board and its governing bodies. Findings – The Crime Triangle complements the Fraud Triangle’s perpetrator-centric focus by examining the environment where fraud occurs and the relevant parties that play their role in preventing fraud or not playing their role, and thus, allowing the occurrence of fraud. Applying both triangles to a fraud event provides a comprehensive view of the fraud event. Research limitations/implications – The scenarios are limited to asset misappropriations with one perpetrator. Future research can apply both triangles to different types of fraud and cases where perpetrators collude to commit fraud. Practical implications – This paper maps the Crime Triangle to the Fraud Triangle to provide forensic accounting practitioners and researchers with a comprehensive perspective of a fraud event. This comprehensive perspective of fraud is the starting point to designing fraud risk management strategies that address both the perpetrator and the environment where the fraud event occurs. Originality/value – This paper is the first to propose the application of the established Crime Triangle environmental criminology theory as a complement to the Fraud Triangle to obtain a comprehensive perspective of a fraud event.

Fraud prevention in Malaysian small and medium enterprises (SMEs)

2018 ◽  
Vol 25 (2) ◽  
pp. 499-517 ◽  
Author(s):  
Abdoulaye N’Guilla Sow ◽  
Rohaida Basiruddin ◽  
Jihad Mohammad ◽  
Siti Zaleha Abdul Rasid
Keyword(s):  
Small Businesses ◽  
Small And Medium Enterprises ◽  
Empirical Studies ◽  
Prevention Measures ◽  
Fraud Prevention ◽  
Content Type ◽  
Fraud Risk ◽  
General Managers ◽  
High Integrity ◽  
Medium Enterprises

Purpose In Malaysia, as in most of the developing countries, small businesses play pivotal roles in the economy. Yet, despite the contribution of small businesses, previous researchers have overlooked the fraud issues that are threating the sustainability of those businesses and instead focus mainly on large and public listed companies. Therefore, the purpose of this study is to identify how small businesses can prevent fraudulent activities. Design/methodology/approach This study used self-administer questioners and distributed 126 questionnaires to general managers, financial managers and supervisors in Malaysian small and medium enterprises (SMEs). Multiple regression was used to test the theoretical model. Findings The output of multiple regressions showed that culture of honesty and high integrity, anti-fraud processes and controls and appropriate oversight functions has a positive and significant effective on fraud prevention mechanisms. Practical implications Overall, this study suggests effective fraud prevention measures to mitigate the fraud risk surrounding Malaysian SMEs and other SMEs in emerging countries. Originality/value There has been a dearth of empirical studies on the effect of culture of honesty, anti-fraud processes and appropriate oversight functions on effective fraud prevention in non-western context, and this study has fulfilled the need for this research.

The risk of financial fraud: a management perspective

2020 ◽  
Vol 27 (4) ◽  
pp. 1143-1159
Author(s):  
Hafiza Aishah Hashim ◽  
Zalailah Salleh ◽  
Izzati Shuhaimi ◽  
Nurul Ain Najwa Ismail
Keyword(s):  
Financial Reporting ◽  
Small Businesses ◽  
Fraud Triangle ◽  
Fraudulent Financial Reporting ◽  
Content Type ◽  
Face To Face ◽  
Fraud Risk ◽  
Management Perspective ◽  
Apparent Reason ◽  
Triangle Theory

Purpose A number of highly publicised scandals such as Enron, Lehman Brothers, Parmalat, Satyam, Toshiba and 1MDB (to name a few) have heightened the awareness of the effects of fraudulent financial reporting. While enormous measures have been taken to curb the fraudulent activities among large and small businesses, the issues are still alarming worldwide. Thus, this study aims to explore the extent to which the prevalence of fraud risk in state-controlled companies and to enhance understanding of the underlying reasons of the fraudulent activities. Design/methodology/approach As this study is a descriptive and exploratory in nature, an exploratory case study method was used in four state-controlled companies. Using the fraud triangle theory to underpin this study, the qualitative face-to-face interviews were carried out with top management of the companies. Findings The study reveals a high risk of fraud occurrence at state-controlled companies that involve dealing with various suppliers, governments, customers and shareholders, even when standard operating procedures and rules and regulation are in place. The apparent reason for this phenomenon is attributed to not only opportunities but also incentives and rationalisations in engaging fraudulent activities. Originality/value As there are relatively few qualitative studies conducted in this area specifically among Malaysian state-controlled companies, this study extends the fraud literature by examining risk exposure and reasons underlying the fraudulent activities. The findings demonstrate that to a certain extent, the fraud triangle theory explains the motivations behind the fraudulent activities. The finding from this study is relevant to regulators, investors, companies and academicians in understanding, preventing and combating fraud.

Do tourists’ gastronomic experiences differ within the same geographical region? A comparative study of two Mediterranean destinations

2018 ◽  
Vol 120 (1) ◽  
pp. 158-171 ◽  
Author(s):  
Gurkan Akdag ◽  
Ozan Guler ◽  
Ali Dalgic ◽  
Sercan Benli ◽  
A. Celil Cakici
Keyword(s):  
Mediterranean Region ◽  
Design Methodology ◽  
Sampling Method ◽  
Significant Contribution ◽  
Geographical Region ◽  
Regression Analyses ◽  
Content Type ◽  
The Common ◽  
Convenience Sampling ◽  
Significant Factors

Purpose The purpose of this paper is to discover the common and differentiating food factors that affect tourists’ gastronomy satisfaction by comparing tourists’ gastronomic experiences at two culinary destinations in the Mediterranean region. Design/methodology/approach A total of 396 usable questionnaires were collected using a convenience sampling method from Cordoba (Spain) and Hatay (Turkey). The data were analysed through descriptive and multivariate analysis methods, including frequency analysis, multiple independent samples t-tests, χ2 analysis and multiple regression analyses. Findings The results indicate that both of the destinations primarily attract existential type gastronomic tourists; however, they also attract recreational and diversionary types of tourist, particularly in Cordoba. From the perspective of Mediterranean cuisine, food quality and traditional gastronomy were determined to be common crucial factors for tourists’ food consumption satisfaction, which outweighs the effects of price, facilities and atmosphere. In addition, service and hospitality and innovation and new tastes in the dishes are the significant factors; however, factors vary according to the destination. Originality/value This study makes a significant contribution to the field food tourism by identifying common significant and insignificant and differentiating food factors that affect tourists’ gastronomic satisfaction in culinary destinations within the same geographical region. The results have the potential to provide a broader perspective for destination marketers and culinary establishments.

The effect of marketing constructs and tourists’ satisfaction on loyalty to a sport destination

2014 ◽  
Vol 7 (4) ◽  
pp. 316-332 ◽  
Author(s):  
Mohammad Reza Jalilvand ◽  
Javad Khazaei Pool ◽  
Leila Nasrolahi Vosta ◽  
Javad Shabani Nafchali
Keyword(s):  
Structural Equation ◽  
Sampling Method ◽  
Equation Model ◽  
Tourism Industry ◽  
Tourist Destination ◽  
Content Type ◽  
Structural Relationships ◽  
Convenience Sampling ◽  
Behavioral Mechanisms ◽  
Practical Implications

Purpose – The purpose of the current study is to explore complicated structural relationships among the variables of tourists’ perceptions of quality and the value of a sport tourist destination and their satisfaction level and loyalty that are vital for successful destination marketing and management. Design/methodology/approach – A survey was used to collect data from a sample of 570 sport tourists who traveled to Nowshahr and Chalous cities in Iran during September 2012. These data were gathered by convenience sampling method and analyzed using a structural equation model (SEM). Findings – The results of the SEM revealed that tourists’ perceived quality and perceived value have a significant impact on their satisfaction. Further, tourists’ satisfaction had a positive and significant effect on the level of their loyalty. Practical implications – Findings of the current study contribute to a better perception of behavioral mechanisms and incentives and provide an acceptable basis to improve tourism industry in both regional and national levels. Originality/value – This is the first such study of the Iranian sports sector.

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