scholarly journals Criminological characteristics of fraud and its implications for the audit activity

2021 ◽  
pp. 5-10
Author(s):  
Volodymyr HOLOVACH ◽  
Tetiana HOLOVACH
Keyword(s):  
Negative Impact ◽  
White Collar Crime ◽  
Financial Statements ◽  
International Standards ◽  
Differential Association ◽  
Fraud Triangle ◽  
Criminal Offenses ◽  
Depth Study ◽  
The Individual ◽  
Audit Activity

The paper discusses the requirements of International Standards on Auditing (ISA) for the identification and assessment of the distortions of financial statements based on the criminological characteristics of fraud. It is found that ISAs, in considering the management's misconduct by the auditor, propose to be guided by the fraud triangle, which is once developed by the American criminologist Donald Ray Cressy. He is known as researcher of white-collar crime from the standpoint of the theory of differential association. This theory is based on the fact that the individual perceives some values positively, and rejects others. As a result, inappropriate behavior is learned by interacting with other actors through communication. It is during communication the certain motives, which are the result of interpretation of the legislation regarding the determination of favorable or negative circumstances, are formed. Being guided by this approach, the representatives of the differential association theory during the study of misconduct focused on the methods, motives, attitudes, explanations of illegal encroachment, that justify the decisions, as well as the issues of rationalization and improvement of illegal activity. They also noted that differential associations may differ in frequency, duration, priority, and intensity. It is established that such fraud assessment is widely used by foreign experts and it received some attention from domestic scientists and practitioners. Instead, its knowledge by auditors is at initial level and doesn't allow to analyze effectively the various fraud risks. In this regard, the need for in-depth study of the fraud's criminological characteristics in the real conditions of economic development of Ukraine is justified. The attention is paid on the significant spread of fraud in Ukraine and the negative impact of such criminal offenses on auditing. The suggestions for improvement of the financial statements audits with taking into account the criminological analysis of misconduct of management staff are made.

scholarly journals The Impact of Private Ownership Structure on Risk Taking by Pakistani Banks: An Empirical Study

2018 ◽  
Vol 6 (3) ◽  
Author(s):  
Muhammad Sajjad Hussain ◽  
Muhammad Muhaizam Bin Musa Musa ◽  
Muhammad Muhaizam Bin Musa Musa ◽  
Abdelnaser Omran Ali
Keyword(s):  
Ownership Structure ◽  
Risk Taking ◽  
Negative Impact ◽  
Negative Relationship ◽  
Financial Statements ◽  
International Standards ◽  
Bank Risk ◽  
Private Ownership ◽  
Private Banks ◽  
The Impact

The financial crisis of 2007-09 was converted the focus of researchers and regulators toward bank risk-taking and this study is also analyzed the private ownership structure impact on Pakistani bank’s risk-taking. This study selects the all Pakistani private banks for investigation and data is collected from financial statements from 2005 to 2016. Most of the past studies found a negative impact of private ownership structure on bank risk-taking and this study is also indicated the negative relationship between private ownership and bank risk-taking. On the other, non-performing loans are double than the international standards that highlighted the owner’s attention toward high risky investments for high return. Thus, this study suggests that check this relationship with other factors that forced the owner’s behavior toward risk.

scholarly journals Identifying causes and potential consequences of financial fraud

2019 ◽  
pp. 47-56
Author(s):  
Tetiana Kizyma ◽  
Andrii Kizyma
Keyword(s):  
Social Relations ◽  
Negative Impact ◽  
Research Literature ◽  
Effective Control ◽  
Economic Losses ◽  
Financial Fraud ◽  
Fraud Triangle ◽  
The Individual ◽  
Global Threat ◽  
The Impact

Introduction. The article claims that due to the rapid growth of financial relations, advancement of globalization processes, the impact of IT and the Internet on financial performance, the number of economic crimes in Ukraine has increased recently, especially financial fraud offences. The authors provide evidence that fraudulent schemes have targeted not only public and private finance, but all social relations. Purpose. Therefore, the aim of the paper is to address financial fraud as a global threat and identify its causes and potential consequences. Methods. For addressing the causes and effects of financial fraud, the following general research methods are used: analysis, synthesis, induction, deduction, abstraction and grouping. Results. It should be noted that the problem of financial fraud has not received sufficient attention in domestic research literature and practice. The paper presents the leading causes of financial fraud, which include economic, moral and psychological causes as well as regulatory, infrastructural and organizational ones. Financial fraud has a negative impact on the national economy and the welfare of citizens, and therefore leads to the multimillion losses. In order to identify consequences of financial fraud, a combination two types of evaluating such consequences is suggested: quantitative (involves the calculation of pecuniary damage, economic losses and lost economic profit due to fraud offences, and qualitative (logically explains circumstances of financial fraud, risks of losing corporate reputation, image and investment attractiveness). There are three major reasons why financial fraud occurs, which constitute the so-called fraud triangle: the opportunity to commit fraud; the pressure on the individual or the motivation behind the crime; the ability to rationalize the fraud. Therefore, the most important tasks for state bodies, economic entities and individuals include neutralizing the factors which lead to financial fraud and exercising effective control over the prevention of fraud offences in social and economic areas in general, and in financial area in particular. Discussion. Further studies should focus on a comprehensive analysis of the most common types of financial fraud, which take place in Ukraine. The authors argue that this will lead to establishing a set of policies aimed at reducing this negative phenomenon.

Strain, Differential Association, and Coercion: Insights from the Criminology Literature on Causes of Accountant's Misconduct

2008 ◽  
Vol 8 (1) ◽  
pp. 1-20 ◽  
Author(s):  
James J. Donegan ◽  
Michele W. Ganon
Keyword(s):  
Criminal Behavior ◽  
White Collar Crime ◽  
Policy Implications ◽  
Financial Statement ◽  
Differential Association ◽  
Financial Fraud ◽  
Certified Public Accountants ◽  
Fraud Triangle ◽  
Financial Statement Fraud ◽  
Coercion Theory

This paper introduces to the accounting literature two prominent criminology theories, strain and differential association, as possible explanations for criminal behavior by accountants and applies a recent integration of the two, coercion theory, to three recent financial statement frauds. We argue that understanding and preventing fraudulent accounting can be furthered by placing the phenomenon within the context of criminology research, which supports both individual and group-level explanations for white-collar crime. We also suggest that the American Institute of Certified Public Accountants (AICPA) moved too quickly in adopting Cressey's fraud triangle as the explanatory model for financial fraud in Statement on Auditing Standards (SAS) No. 99. Our analysis, although exploratory in nature, suggests that examining financial statement fraud through the lens provided by criminology theory may provide new insights into its causes as well as tools for detection and prevention. We conclude with a discussion of policy implications.

scholarly journals Audit development in Ukraine: aspects of regulation of audit activity

2021 ◽  
Vol 13 (2) ◽  
Author(s):  
T. Stupnytska ◽  
N. Kuprina ◽  
Н. Tkachuk ◽  
Kh. Baraniuk
Keyword(s):  
European Union ◽  
Regulatory System ◽  
Financial Statements ◽  
Legal Regulation ◽  
International Standards ◽  
The European Union ◽  
National Audit ◽  
Related Services ◽  
Audit System ◽  
Audit Activity

Auditing in Ukraine is on the path of formation and development, which necessitates the improvement and revision of regulations, which, in turn, leads to an increase in both theoretical and practical aspectsof audit and audit activity. Modern conditions of the process of Ukraine's integration into the European spacecause the regulatory framework to be adapted to the legislation of the European Union. During the period ofoperation, the national audit system in Ukraine is constantly improving. The article analyzes the normativedocuments and publications of scientists to determine aspects of regulatory regulation of audit in Ukraine inconnection with its integration and the possibility of adapting existing legislation to the legislation of the European Union. The analysis showed that the audit regulatory system in Ukraine is multilevel, but the maindocuments governing audit in the country are the Law "On Audit of Financial Statements and Audit activity"and International Standards for Quality Control, Auditing, Review, Other Assurance and Related Services .The levels of normative-legal regulation of audit and the main differences in the structure of normative actsregulating the implementation of audit and audit activities in Ukraine have been considered.

scholarly journals Auditor's responsibility during the audit of the application of management's principle of continuity in the preparation of financial statements

2020 ◽  
pp. 25-27
Author(s):  
Serhii SELISHCHEV
Keyword(s):  
Quality Control ◽  
Financial Statements ◽  
Legal Framework ◽  
International Standards ◽  
Professional Responsibility ◽  
Internal Quality Control ◽  
Business Continuity ◽  
Internal Quality ◽  
Audit Activity ◽  
Research Show

The article explores the information base on the regulation of auditor responsibility. The types of responsibilities and the main elements that need to be considered when evaluating the auditor's actions that may pose a risk to the entity's continued business are systematized. Recommendations have been made regarding the specific provisions of the internal company quality control audit policy in terms of ensuring that the auditor understands his or her professional responsibility. Therefore, attention should be paid to ensuring the internal quality control of the procedures performed by the auditor in collecting, organizing and analyzing information on threats to business continuity, notably by establishing a clear system of responsibilities and responsibilities between partners for the task. Thus, the rules of the internal quality control system for audit services have been developed in the aspect of ensuring pre-emptive measures of compliance with professional responsibility when planning and conducting audit procedures to verify the assumption of continuity of activity of an entity. The results of the conducted research show that the issue of control of the auditor's responsibility requires further elaboration, first of all, due to the updating of the legal framework for the regulation of audit activity. As a result of our research, we have developed a number of methodological recommendations aimed at combining the requirements of international standards, legislation and practice of auditing, in particular in the aspect of ensuring the responsibility of the auditor, in the process of assessing the risks of termination of the enterprise, by building a regulation that is a system of key elements of the auditor's responsibility, under a time to assess the risk of business continuity that can be adequately monitored by audit.

УКРАЇНОЗНАВЧИЙ ОСВІТНІЙ ЧИННИК В УМОВАХ СУЧАСНОЇ УКРАЇНСЬКОЇ МАСОВОЇ КУЛЬТУРИ

2019 ◽  
pp. 22-29
Author(s):  
Н. В. Фрадкіна
Keyword(s):  
Mass Culture ◽  
Personal Development ◽  
Negative Impact ◽  
Educational Process ◽  
Point Of View ◽  
Character Trait ◽  
Main Task ◽  
Leading Role ◽  
The Individual

The purpose and tasks of the work are to analyze the contemporary Ukrainian mass culture in terms of its value and humanistic components, as well as the importance of cultural studies and Ukrainian studies in educational disciplines for the formation of a holistic worldview of modern youth.Analysis of research and publications. Scientists repeatedly turned to the problems of the role of spirituality in the formation of society and its culture. This problem is highlighted in the publications by O. Losev, V. Lytvyn, D. Likhachev, S. Avierintsev, M. Zakovych, I. Stepanenko and E. Kostyshyn.Experts see the main negative impact of mass culture on the quality approach, which determines mass culture through the market, because mass culture, from our point of view, is everything that is sold and used in mass demand.One of the most interesting studies on this issue was the work by the representatives of Frankfurt School M. Horkheimer and T. Adorno «Dialectics of Enlightenment» (1947), devoted to a detailed analysis of mass culture. Propaganda at all socio-cultural levels in the form is similar in both totalitarian and democratic countries. It is connected, according to the authors, with the direction of European enlightenment. The tendency to unify people is a manifestation of the influence of mass culture, from cinema to pop. Mass culture is a phenomenon whose existence is associated with commerce (accumulation in any form – this is the main feature of education), in general, the fact that it exists in this form is related to the direction of the history of civilization.Modern mass culture, with its externally attractive and easily assimilated ideas and symbols, appealing to the trends of modern fashion, becomes a standard of prestigious consumption, does not require intense reflection, allows you to relax, distract, not teach, but entertains, preaches hedonism as the main spiritual value. And as a consequence, there are socio-cultural risks: an active rejection of other people, which leads to the formation of indifference; cruelty as a character trait; increase of violent and mercenary crime; increase in the number of alcohol and drug addicts; anti-patriotism; indifference to the values of the family and as a result of social orphanhood and prostitution.Conclusions, perspectives of research. Thus, we can conclude that modern Ukrainian education is predominantly formed by the values of mass culture. Namely, according to the «Dialectic» by Horkheimer and Adorno, «semi-enlightenment becomes an objective spirit» of our modern society.It is concluded that only high-quality education can create the opposite of the onset of mass culture and the destruction of spirituality in our society. It is proved that only by realizing the importance of cultivating disciplines in the educational process and the spiritual upbringing of the nation, through educational reforms, humanitarian knowledge will gradually return to student audiences.Formation of youth occurs under the influence of social environment, culture, education and self-education. The optimal combination of these factors determines both the process of socialization itself and how successful it will be. In this context, one can see the leading role of education and upbringing. It turns out that the main task of modern education is to spread its influence on the development of spiritual culture of the individual, which eventually becomes a solid foundation for the formation of the individual. Such a subject requires both philosophical and humanitarian approaches in further integrated interdisciplinary research, since the availability of such research will provide the theoretical foundation for truly modern educational and personal development.

MEDIA SOCIALIZATION OF PERSONALITY IN THE CONTEXT OF INMUTATION IN THE MASS MEDIA

2021 ◽  
pp. 104-109
Author(s):  
Chernysh O.O.
Keyword(s):  
Mass Media ◽  
Negative Impact ◽  
Effective Interaction ◽  
Individual Characteristics ◽  
Media Culture ◽  
Active Growth ◽  
Media Space ◽  
The Media ◽  
The Individual

The urgency of the researched problem is connected with the growing role of mass media in modern conditions leads to change of values and transformation of identity of the person. The active growth of the role of the media, their influence on the formation and development of personality leads to the concept of “media socialization” and immutation in the media. The aim of the study is to outline the possibilities of the process of media socialization in the context of immutation in the media. The methods of our research are: analysis of pedagogical, psychological, literature, synthesis, comparison, generalization. The article analyzes the views of domestic and foreign scientists on the problem of immutation in the media and the transformation of the information space. In the context of the mass nature of the immutation of society, the concept of “media socialization” becomes relevant, which is the basis for reducing the negative impact of the media on the individual.The author identifies the lack of a thorough study of the concept of “media socialization” in modern scientific thought. Thus, media socialization is associated with the transformation of traditional means of socialization, and is to assimilate and reproduce the social experience of mankind with the help of new media.The article analyzes the essence of the concepts “media space”, “mass media” and “immutation”. The influence of mass media on the formation and development of the modern personality is described in detail.The study concluded that it is necessary to form a media culture of the individual, to establish safe and effective interaction of young people with the modern media system, the formation of media awareness, media literacy and media competence in accordance with age and individual characteristics for successful media socialization. The role of state bodies in solving the problem of media socialization of the individual was also determined. It is determined that the process of formation of media culture in youth should take place at the level of traditional institutions of socialization of the individual.The author sees the prospect of further research in a detailed analysis and study of the potential of educational institutions as an institution and a means of counteracting the mass nature of the immutation of society.Key words: immutation, media socialization, mass media, media space, information.

Boundaries of Restricting the Rights of Human and Citizen

2020 ◽  
Vol 26 (2) ◽  
pp. 232-236
Author(s):  
Manol Stanin
Keyword(s):  
Negative Impact ◽  
The Individual ◽  
The Right ◽  
Positive Results

AbstractLimitation of rights is a measure proved its effectiveness with positive results for the community in war, military or another emergency.Attitude to rightsmust be human with a view to the right-to-human relationshipbecause the crossing of a certain boundary leads to a disintegration of rights and a negative impact on the personality.This implies necessity from legal institutionalization of clear criteria to refine the limitation of rights, both for the purpose of their protection and for the purpose of protecting the individual.

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.

IFRS IMPLEMENTATION AS ONE OF THE FACTORS FOR IMPROVING THE INVESTMENT CLIMATE IN UKRAINE

2017 ◽  
Author(s):  
Kateryna Sova ◽  
◽  
Natalia Yatsenko ◽  
Denys Zagirniak ◽  
◽  
...  
Keyword(s):  
Financial Reporting ◽  
Direct Investment ◽  
Financial Statements ◽  
International Standards ◽  
Investment Climate ◽  
The European Union ◽  
Economic Activities ◽  
Financial Reporting Standards ◽  
Almost All ◽  
The Impact

The article is devoted to the study of the impact of the introduction of International Financial Reporting Standards (IFRS) on changes in the investment climate in Ukraine. The relevance of the topic is that improving the practice of applying IFRS as a tool for exchanging financial information is one of the key conditions for improving the investment climate in Ukraine. The authors have created the generalized scheme that illustrates the chronological list of enterprises that are required by law to prepare financial statements in accordance with IFRS. It was noted that in 2018, in accordance with Part 2 of Article 12 of the law on accounting and financial reporting in Ukraine and resolution of the Cabinet of Ministers of Ukraine No. 547 from 11.07.2018, the criteria of enterprises that are required to prepare financial statements in accordance with IFRS were updated. This step significantly increased the level of application of international standards due to the adoption of such a decision at the legislative level. The dynamics of the number of IFRS enterprises in Ukraine was analyzed. The analysis showed that over the past three years, the number of almost all enterprises that must apply international standards has been growing. The advantages of using IFRS for different users of financial statements were determined. It was determined that the priority users of IFRS financial statements are investors. At the same time, it was noted that the main advantage for other users of financial statements prepared in accordance with international standards is the improvement of the investment climate. The dynamics of the Investment Attractiveness Index of Ukraine based on the Likert scale in the period from 2016 to 2020 was analyzed. The direct investment receipts to Ukraine from the European Union countries were studied. The dynamics of direct investment in the Ukrainian economy was analyzed for two types of economic activities that should form financial statements in accordance with IFRS, namely, the extractive industry and quarrying, as well as financial and insurance activities.

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