Fraud Triangle Theory: Calling for New Factors

2021 ◽  
Vol 7 ◽  
pp. 54-64
Author(s):  
Naqiah Awang ◽  
Nur Syafiqah Hussin ◽  
Fatin Adilah Razali ◽  
Shafinaz Lyana Abu Talib
Keyword(s):  
Business Environment ◽  
Economic Downturn ◽  
Fraud Triangle ◽  
Risk Area ◽  
Motivation Factors ◽  
Detailed Evaluation ◽  
Modern Business ◽  
Prior Literature ◽  
Triangle Theory ◽  
New Generation

The famous financial scandal of Enron, WorldCom and 1 Malaysia Development Berhad has harmed the auditor’s reputation as the protector of shareholders’ rights. Auditors have done their part by conducting systematic audit procedures and “What Could Go Wrong” analysis in assessing the possible risk area to assist fraud detection in the client’s financial matters. However, fraud cases never seem to decline. Regardless of any safeguarding measures established, fraud incidents can just occur and be worsened by economic downturn and prolonged inflation especially after the pandemic ends. Additionally, the characteristic of the modern business environment, technology sophistication and new generation traits had challenged Cressey Fraud Triangle Theory on its validity and relevancy. Therefore, associating all these possible challenges into consideration, this study aims to review prior literature related to the evolution of Cressey fraud theory to propose a new insight in considering relevant motivation factors that drive fraud penetrations. From the review, the study discovered the need for a detailed evaluation and research on the essential fraud element in constructing an all-rounded fraud prevention mechanism.

Fraud Triangle Theory: Calling for New Factors

2020 ◽  
Vol 7 (1) ◽  
pp. 54-64
Author(s):  
Naqiah Awang ◽  
Nur Syafiqah Hussin ◽  
Fatin Adilah Razali ◽  
Shafinaz Lyana Abu Talib
Keyword(s):  
Business Environment ◽  
Economic Downturn ◽  
Fraud Triangle ◽  
Risk Area ◽  
Motivation Factors ◽  
Detailed Evaluation ◽  
Modern Business ◽  
Prior Literature ◽  
Triangle Theory ◽  
New Generation

The famous financial scandal of Enron, WorldCom and 1 Malaysia Development Berhad has harmed the auditor’s reputation as the protector of shareholders’ rights. Auditors have done their part by conducting systematic audit procedures and “What Could Go Wrong” analysis in assessing the possible risk area to assist fraud detection in the client’s financial matters. However, fraud cases never seem to decline. Regardless of any safeguarding measures established, fraud incidents can just occur and be worsened by economic downturn and prolonged inflation especially after the pandemic ends. Additionally, the characteristic of the modern business environment, technology sophistication and new generation traits had challenged Cressey Fraud Triangle Theory on its validity and relevancy. Therefore, associating all these possible challenges into consideration, this study aims to review prior literature related to the evolution of Cressey fraud theory to propose a new insight in considering relevant motivation factors that drive fraud penetrations. From the review, the study discovered the need for a detailed evaluation and research on the essential fraud element in constructing an all-rounded fraud prevention mechanism. 

New Generation of Productive Workers

2021 ◽  
pp. 1632-1646
Author(s):  
Rok Cresnar
Keyword(s):  
Industry 4.0 ◽  
Industrial Revolution ◽  
Personal Values ◽  
Business Environment ◽  
Mediating Effect ◽  
Employee Productivity ◽  
Competency Models ◽  
Modern Business ◽  
New Generation

The main purpose of this chapter is to consider how can the millennials' personal values impact employee productivity in the future organizational environment of Industry 4.0. In the modern business environment, major changes are happening in many fronts. On one hand, we have the phenomenon of digitalization and Industry 4.0, and on another hand, we see that the millennials are rapidly taking over important roles and positions in those organizations that are impacted by digitalization. If we consider the notion that the new industrial revolution behind Industry 4.0 will be based on major improvements in productivity due to the mediating effect of a technological revolution, then the role of employee productivity or better say the millennials' productivity will be paramount. This chapter shows that based on deep analysis of millennials' personal values worldwide, the millennials hold prominent personal values, which correspond well with Industry 4.0 readiness and competency models, meaning that they can significantly impact the productivity of an organization.

Analysis of employee and management fraud in Tanzania

2019 ◽  
Vol 26 (2) ◽  
pp. 412-431
Author(s):  
Omari Zuberi ◽  
Siasa Issa Mzenzi
Keyword(s):  
Public Awareness ◽  
Descriptive Analysis ◽  
Principal Component ◽  
Financial Strain ◽  
Fraud Triangle ◽  
Public And Private ◽  
Content Type ◽  
Motivation Factors ◽  
Management Fraud ◽  
Triangle Theory

Purpose The study aims to explore specific motivations, rationalizations and opportunities that are involved in the occurrences of both employee and management fraud in the context of an emerging African country, Tanzania. It builds and extends from the fraud triangle theory. Design/methodology/approach A survey was developed and administered to 114 participants who had witnessed, had examined or had been involved in fraud resolutions. The participants included fraud examiners, business managers and owners, victims, auditors, lawyers, and law enforcement agents. The data collected were analysed using descriptive analysis, principal component analysis and correlation analysis. Findings The results revealed six motivation factors that incentivize employees and managers to engage in fraudulent behaviours. These are business financial strain, social incentives and pressure, greed, operating problems, internal pressures and malevolent work environment. In addition, fraudsters rationalized their behaviour through five significant neutralization techniques identified as social weighting, transferring of blame, denial of injury, attitude and prior fraud history. Lastly, victim organisations were identified to have three main fraud opportunities: poor control environment, inadequate control activities and circumstances that allowed collusive behaviour among fraudsters. Research limitations/implications While the study attempted to explore the motivations, opportunities and rationalizations from the perspectives of the fraud-fighting professionals and witnesses, their views and suggestions might be different from the actual known fraudsters or incarcerated individuals. Practical implications Business organisations, fraud-fighting professionals and general community must understand the factors behind fraud occurrences, so proper measures may be taken to limit the frequency and amount of fraud losses. Social implications Creation of public awareness and dialogue necessary for the prevention, fighting and deterrence against all forms of fraud. Originality/value Despite the occurrences of many scams in both public and private sectors, limited studies exist as to the triggers behind fraud occurrences in the context of the developing countries and whether these triggers are the same as in other contexts. This study is an attempt to fill this gap.

Integrated thinking, earnings manipulation and value creation: Malaysian empirical evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nor Farizal Mohammed ◽  
Nor Aqilah Sutainim ◽  
Md. Shafiqul Islam ◽  
Norhayati Mohamed
Keyword(s):  
Empirical Evidence ◽  
Value Creation ◽  
Earnings Manipulation ◽  
Fraud Triangle ◽  
Integrated Reporting ◽  
Content Type ◽  
Prior Literature ◽  
Triangle Theory ◽  
Market Capitalisation ◽  
The Relationship

PurposePrior literature proposes that integrated reporting (IR) drives integrated thinking (IT), enabling an organisation to create value for stakeholders in both quantitative (economic performance) and qualitative manners (beyond financially-oriented information). Fraud triangle theory also predicts that earnings manipulation may also affect the creation of value. Thus, this study seeks to provide empirical evidence on the relationship between IT, earnings manipulation and value creation.Design/methodology/approachThis data sample comprises of 497 observations from 2014 to 2018 of the top 100 market capitalisation of Malaysian public listed companies (PLCs) in Bursa Malaysia. This study used an index score for IT variable and Beneish’s M-score as a proxy to detect earnings manipulations and to classify the companies into non-manipulators and manipulator companies. Value creation measurements consist of four variables under shareholder's value creation and one variable represents value creation through innovation.FindingsThe findings show that IT is significantly related to value creation, whereas earnings manipulation had no significant relationship with value creation except for value creation measured using Tobin's Q ratio. The alarming finding is that a fraud predictor, namely earning manipulation, measured by Beneish-M, is not a predictor of whether companies are creating better or less value.Originality/valueThis study is among the early literature that provides empirical evidence of the relationship between IT and value creation. Furthermore, this paper adds to look at the association of earning manipulation and value creation.

New Generation of Productive Workers

2020 ◽  
pp. 261-275
Author(s):  
Rok Cresnar
Keyword(s):  
Industry 4.0 ◽  
Industrial Revolution ◽  
Personal Values ◽  
Business Environment ◽  
Mediating Effect ◽  
Employee Productivity ◽  
Competency Models ◽  
Modern Business ◽  
New Generation

The main purpose of this chapter is to consider how can the millennials' personal values impact employee productivity in the future organizational environment of Industry 4.0. In the modern business environment, major changes are happening in many fronts. On one hand, we have the phenomenon of digitalization and Industry 4.0, and on another hand, we see that the millennials are rapidly taking over important roles and positions in those organizations that are impacted by digitalization. If we consider the notion that the new industrial revolution behind Industry 4.0 will be based on major improvements in productivity due to the mediating effect of a technological revolution, then the role of employee productivity or better say the millennials' productivity will be paramount. This chapter shows that based on deep analysis of millennials' personal values worldwide, the millennials hold prominent personal values, which correspond well with Industry 4.0 readiness and competency models, meaning that they can significantly impact the productivity of an organization.

A DATA DEFENSE STRATEGY FOR MODERN BUSINESS ENVIRONMENT

2018 ◽  
Vol 9 (1) ◽  
pp. 21-26
Author(s):  
FLORIN OGIGAU NEAMTIU ◽  
Keyword(s):  
Business Environment ◽  
Defense Strategy ◽  
Modern Business

scholarly journals Does a National Innovation System Encourage Sustainability? Lessons from the Construction Industry in Serbia

2021 ◽  
Vol 13 (7) ◽  
pp. 3591
Author(s):  
Marija Mosurović Ružičić ◽  
Mirjana Miletić ◽  
Marina Dobrota
Keyword(s):  
Energy Efficiency ◽  
Construction Industry ◽  
Innovation System ◽  
Business Environment ◽  
National Innovation System ◽  
Eastern European ◽  
System Perspective ◽  
Modern Business ◽  
Eastern European Countries ◽  
The Impact

Influences from the modern business environment indicate the need for the incorporation of sustainability concepts from an innovation system perspective. In the presented research, we emphasize the energy efficiency concept within the frame of sustainability and innovation. The aim of this research was to underline and explore the relationships between innovation, energy efficiency, and sustainability in the construction industry. To answer the research questions, a questionnaire was created to explore the impact of the energy efficiency certification process on the innovation behavior of construction industry enterprises in Serbia. The results show that energy efficiency has supported innovation, and that there exists a relationship between sustainability and innovativeness in the construction industry. Applying energy efficiency passports has influenced the co-operation of enterprises in the construction sector and other actors in the national innovation system in Serbia. The innovation concept demonstrates that enterprises in the construction industry should be observed as a part of the wider picture—the national innovation system. In turn, the specific context of a particular national innovation system should be seen within the wider picture of national innovation systems of Central and Eastern European Countries (CEECs).

Adapting the scrum methodology for establishing the dynamic inter-organizational collaboration

2018 ◽  
Vol 31 (4) ◽  
pp. 852-866 ◽  
Author(s):  
Mohammad Reza Mollahoseini Ardakani ◽  
Seyyed Mohsen Hashemi ◽  
Mohammadreza Razzazi
Keyword(s):  
Value Added ◽  
Business Environment ◽  
Professional Organizations ◽  
Business Practices ◽  
Content Type ◽  
Incremental Method ◽  
Business Environments ◽  
Project Life Cycle ◽  
Modern Business ◽  
Project Life

Purpose The purpose of this paper is to propose an applicable method for establishing the dynamic inter-organizational collaborations (DIOCs) based on the scrum methodology. Design/methodology/approach The scrum methodology embedded within the context of the DIOC project life cycle was used and adapted to being usable with specific characteristics of the project. Findings In order to succeed in the highly competitive, dynamic and changing business environments, the organizations need to change their view of business practices. The transition from the traditional status of manufacturing to the inter-organizational collaborations can be one of the fundamental changes in the modern business management. The proposed method has the capability to establish DIOCs effectively and efficiently whilst guaranteeing agility, competitiveness, and risk timely management. Originality/value Establishing collaborative alliances via association of various experienced and professional organizations and producing the value-added market’s need services is an effective and efficient solution for survival of SMEs in the current competitive, dynamic and changing business environment. So far, different frameworks, reference models/architectures, and many theoretical discussions have been presented for DIOCs context, but these representations are conceptual, empirical and generic. This paper aims to propose an applicable iterative and incremental method for establishing the DIOC which guarantees the agility and risk timely management of the establishment process and promotes competitiveness of partners.

Understanding the fraud theories and advancing with integrity model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shefali Saluja ◽  
Arun Aggarwal ◽  
Amit Mittal
Keyword(s):  
Theoretical Background ◽  
Traditional Theory ◽  
Second Phase ◽  
Fraud Triangle ◽  
Mice Model ◽  
Corporate Fraud ◽  
Content Type ◽  
Fraud Theory ◽  
Triangle Theory ◽  
Major Factors

Purpose The fraud landscape talks about the existence of fraudulent activities and can be assessed with the help of fraud literature. Taking this into consideration, this paper qualitatively revisits the famous fraud triangle theory developed by Donald R. Cressey (1950) which is the most traditional theory to detect a fraud. This paper aims to discuss various fraud models that have been extensions to fraud triangle theory and reviews the factors that drive a corporate fraud. This study is divided into two phases. The first phases discuss the various theories which have been developed to detect and prevent corporate frauds in organisations, and in the second phase the authors recognize “integrity” as a new extension to the basic fraud theory. The integrity model has been introduced as “fraud square” contributing to the development of fraud theory. Integrity plays a very important role in detecting corporate frauds, and this paper will act as a theoretical benchmark for future references. The implication of this study would help future researchers, academicians and practitioners to understand the fourth element of the fraud theory and would help improve the professional standards of organisations and regulators. Design/methodology/approach This paper revisits the literature in detail and reviews the most acknowledged models to explain “why people commit frauds” – the fraud triangle, fraud scale, the fraud diamond, the ABC model, the MICE model and the SCORE model. The authors contend that the traditional models need to be modernized to acclimate to the current developments in the rapidly increasing fraud incidents, both in occurrence and seriousness. Additionally, this paper builds on theoretical background to generate new model so as to improve the understanding behind the major factors which lead to commitment of frauds. Findings The authors identify a major element – integrity – in the research. As per ACFE 2020, “There are more than 3.3 billion people in the global workforce, half of them takes illegal use of gains from the organisation and some are discipled with integrity who does not cause any harm to the organisation.” To prevent fraud, integrity plays a very important role in organisations (Bakri et al., 2017). It has been found that individuals with less integrity are basically specified to a greater level of mismanagement. The organisations that have worked with integrity will improve performance at work and will always promote the best employees to work with less supervision. Originality/value This paper develops the integrity model to contribute to the development of fraud theory by identifying the key factors that play a major role in whether fraud will actually occur and acting as a theoretical benchmark for all future reference.

Sign in / Sign up

Export Citation Format

Share Document