Fraudulent financial reporting motivations in emerging markets

Purpose The purpose of this paper is to study comparatively motivations for committing fraud in financial statements in two emerging markets including Iran and Iraq. Design/methodology/approach The research is a descriptive survey and statistical population consists of independent auditors. The field survey and questionnaire were used for data collection. Findings Findings can raise auditors’ awareness of management fraud motivations. It can help regulators and authorities in both countries as well as other emerging markets for establishing suitable rules and regulation. Originality/value This paper’s contribution was in identifying and comparing management’s motivations to commit financial reporting fraud in two emerging markets including Iraq and Iran.

For Better Healthcare Mining Health Data

Data mining has great contributions to the healthcare such as support for effective treatment, healthcare management, customer relation management, fraud and abuse detection and decision making. The common data mining methods used in healthcare are Artificial Neural Network, Decision trees, Genetic Algorithms, Nearest neighbor method, Logistic regression, Fuzzy logic, Fuzzy based Neural Networks, Bayesian Networks and Support Vector Machines. The most used task is classification. Because of the complexity and toughness of medical domain, data mining is not an easy task to accomplish. In addition, privacy and security of patient data is a big issue to deal with because of the sensitivity of healthcare data. There exist additional serious challenges. This chapter is a descriptive study aimed to provide an acquaintance to data mining and its usage and applications in healthcare domain. The use of Data mining in healthcare informatics and challenges will be examined.

Identifying Organisational Climate Elements that can be used to Detect and Prevent Management Fraud

Management fraud is a global problem that has become more widespread than ever before. Current modes for detecting and preventing fraud, such as those based on demographic factors, have not been very successful. It is argued that organisational psychology—more specifically the study of organisational climate—provides excellent vantage points from which to understand management fraud. The purpose of this study was to identify organisational climate elements that increase the potential risk of management fraud within an organisation. The study has done this in order to employ these elements in detecting and preventing potential management fraud. A mixed research design was employed, encompassing two broad phases, namely: classification, whereby a framework was developed; and empirical validation, which made use of analytical induction as well as Lawshe’s content validity ratio. It was found that leadership style and managerial values are the elements that relate most to the detection and prevention of management fraud. It was also found that ethical leniency, poor example setting and hypocrisy were likely to create climates in which management fraud takes place. In terms of values, the study found that it is not simply the adoption or communication of values that is important in shaping a fraud-conducive climate, but rather whether or not any professed values are seen to be implemented or lived.

Management Fraud Propensity Factors, Governance Interactions and Earnings Manipulation: a Case of Malaysian Public Listed Companies

This study aims to determine Management Fraud Propensity Factors of Fraud Triangle and International Standards on Auditing no: 240 (ISA 240) relationship with earning manipulation. It also examines potential moderating effect of Corporate Governance, measured by index as proxy to opportunity on relationship between Management Fraud Propensity Factors and Earning Manipulation. Samples of this study consisted of 504 firm-year observations comprising of 252 earnings manipulating firms matched with 252 non-earnings manipulating firms based on industry, year and size. Corporate governance disclosure was measured using corporate governance index (CGI), replicated from ASEAN Corporate Governance Scorecard (ACGSC) components. Management fraud propensity factors (pressure/ incentives, opportunity, rationalization/ attitude) were examined using logistical regression to assess relationship with earnings manipulation. This study is unique as it utilised CGI as proxy for opportunity, replacing limited numerous governance attributes commonly used argued for deficiency in portraying existing linkage within corporate governance ecosystem. CGI was also tested on its potential moderating effect on relationship between management fraud propensity factors (pressure/ incentives; rationalization/ attitude) and earnings manipulation, in line with Agency Theory. Results revealed management fraud propensity factors of pressure/incentives (recurring negative cash flows from operation, rapid growth, unusual profitability, need for financing), opportunity (corporate governance index) and rationalisation/attitudes (management interest on earnings trend) significantly related with earnings manipulation. Contradictory to expectation, CGI also showed significant positive interaction on strengthening relationship between pressure-related fraud propensity factors due to recurring negative cash flows from operations and earnings manipulation. Possible explanation is firms with strong corporate governance but experiencing weak financial standings are constantly pressured by shareholders to meet their interests which driven management to manipulate profit. This study provides tools to regulators to stay vigilant of firms with characteristics of potential earnings manipulation engagement and useful in providing insights to shareholders for selecting stocks not prone to earnings manipulation.

Modus Kecurangan & Program Anti Kecurangan di Pelabuhan (Studi Kasus Pelabuhan di Jakarta)

The purpose of this study was to determine the anti-fraud and fraud in the port sector. The research method used in this research is a qualitative approach, with the case study. The results of this study found that fraud has been done by employees (employee fraud), management (management fraud), supplier (vendor fraud) and customer (customer fraud) and anti-fraud program, PT Pelindo II has launched IPC Bersih program as a form of implementation of Whistleblowing System.

Analysis of employee and management fraud in Tanzania

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.

Exploring external auditors’ perceptions of the motivations behind management fraud in Egypt – a mixed methods approach

Purpose This paper aims to explore the perceptions of external auditors’ on the motivations behind management fraud, which could increase the likelihood of detecting financial reporting fraud. Design methodology/approach Mixed research methods, namely, an online questionnaire and semi-structured interviews, were used for data collection from external auditors in Egypt. Findings The findings revealed that the desire to get remuneration or bonuses and the need to secure financing are the most common motivations behind management fraud in Egypt. The current study also found other motivations behind management fraud that could be more specific to the Egyptian context. Research limitations/implications Gaining access to small- and medium-size audit firms, in particular, was very difficult. This study did not use factor analysis to determine whether differences exist among the motives/factors, which should be the focus of future studies. Practical implications This study was the first to provide empirical evidence on the motivations behind management fraud in the context of a developing nation such as Egypt. The findings of this study could be important for Egyptian regulators and external auditors who wish to reduce fraud risks in their own country. The findings could also help external auditors across the globe in recognising the signs that can trigger management motivations to engage in financial reporting fraud, which in turn could increase the likelihood of detecting financial reporting fraud. Originality/value This study was the first to provide empirical evidence on the motivations behind management fraud in the context of a developing nation such as Egypt. The findings of this study could be important for Egyptian regulators and external auditors who wish to reduce fraud risks in their own country. The findings could also help external auditors across the globe in recognising the signs that can trigger management motivations to engage in financial reporting fraud, which in turn could increase the likelihood of detecting financial reporting fraud.