Corruption from Fraud Theory Perspective

This study aims to analyze the corruption phenomena from a fraud theory perspective. Primarily, we examine the effect of greed, opportunity, need, and Capability on corruption behavior. The sample of this study was 31 corrupt inmates in the Padang II-A prison in Indonesia. The results showed that greed and opportunity affect corruption. But we found that need and Capability did not affect the corruption. This finding implies the body of knowledge that fraud theory may explain the corruption phenomena. This study also has a contribution to the regulators and government.

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.

Understanding the fraud theories and advancing with integrity model

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.

Kecurangan Akademik Dalam Perspektif Teori Fraud Diamond

Academic fraud can occur in university because it is influenced by various underlying factors, both internally and externally. The purpose of holding this study was to determine whether the pressure, opportunity, rationalization, and abilities possessed by students significantly influence the occurrence of academic fraud in university. This research was conducted on 92 students of the Accounting Major in East Java "Veteran" National Development University by filling out a questionnaire via Google Form. The results of data collection were processed statistically using SmartPLS. The results of data analysis show that pressure, rationalization, and ability have a significant effect on academic fraud, while opportunities do not significantly influence students because lecturers always provide objective assessments to students, thereby reducing the chance of academic fraud. Keywords: Diamond Fraud Theory, Academic Fraud

The conception of organisational fraud: the need for rejuvenation of fraud theory

Purpose This paper aims to challenge some of the underlying concepts about causation of fraud and in doing so enriches knowledge and insight into the management of fraud. Design/methodology/approach This study is a part of fieldwork carried out in Indonesia. Findings Organisational fraud is an exceptional type of crime. Hence, the underlying antecedents and consequences of fraud in organisation are distinct from other crimes, especially violent crimes. The underlying logic in criminological and sociological theories and literature cannot fully explain the causal factors of fraud in the organisation. This leads to a theoretical discussion about the reconstruction of the fraud theory. Implications and suggestions for further studies are discussed in this study. Originality/value This study provides a new understanding of fraud and its antecedents and consequences. In doing so, it examines the long-standing debate in criminology and sociology about the theories concerning crime causation, as these areas provide the underlying logic of fraud theory.

Analisis Faktor Pendorong Kecurangan Berbasis Teori Diamond Fraud pada Pemerintah Desa

The purpose of this study is to describe the perceptions of village government officials regarding the factors driving diamond fraud based fraud. Diamond fraud theory explains the factors of someone committing fraud. The methodology of this research is qualitative, the data used are primary data that is questionnaire. The sample in this study used a purposive sampling method with criteria of 256 employees of the Lumajang district government. The results showed that the perception of village government officials about the factors driving fraud was quite good, with mode 4 which means agreeing with the proxy of the diamond fraud theory.

ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI TERJADINYA REAL EARNING MANAGEMENT: PERSPEKTIF DIAMOND FRAUD THEORY (STUDI PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2016-2018)

<p>Penelitian ini bertujuan untuk mengetahui faktor-faktor yang mempengaruhi <em>real earning management</em> dengan menggunakan analisis diamond fraud. Penelitian menganalisis pengaruh target keuangan, kualitas auditor eksternal, perubahan direksi dan pemantauan yang tidak efektif pada <em>real</em> <em>earning management</em>. Sampel penelitian berjumlah 63 perusahaan manufaktur <em>go public</em> pada periode 2016-2018. Sumber data penelitian adalah data sekunder berupa laporan tahunan di situs resmi Bursa Efek Indonesia. Pengujian penelitian menggunakan metode regresi linear. Hasil penelitian menunjukkan bahwa pemantauan yang tidak efektif berpengaruh pada <em>real earning management</em>, sedangkan target keuangan, kualitas auditor eksternal, dan pergantian direksi dengan ukuran perusahaan tidak berpengaruh pada <em>real earning management</em>. </p>

Equity as a nest: the principle-based secret trusts

The fraud theory and the dehors the will theory are generally considered as the starting points for analysing secret trusts. However, both theories have been severely criticised. This article argues that the fraud theory is defensible from a jurisprudential perspective and should be preferred. Had a ‘principle-based’ approach been adopted in the analysis, secret trusts can indeed be justified on the basis of a legal principle—‘the prevention of fraud’—so that the dehors the will theory is unnecessary. The ‘principle-based’ approach should be distinguished from the ‘rule-based’ approach which is suitable for the analysis of statutes. The ‘principle-based’ approach can also reconcile fully-secret trusts and half-secret trusts.

ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI TERJADINYA FINANCIAL STATEMENT FRAUD: PERSPEKTIF DIAMOND FRAUD THEORY (Studi Pada Perusahaan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Periode 2014-2016)

This study aimed to analyze the factors that encourage financial statement fraud with analysis of diamond fraud theory. This research analyzes the influence of variable pressure proxied by financial targets, financial stability, external pressure, personal financial need, the opportunity proxied by nature of industry, ineffective monitoring, razionalization proxied by audit opinion, and the capability to replace any directors proxies against financial statements fraud. The sample in this research are 105 samples of banking companies listed on Indonesia Stock Exchange in the period 2014-2016. The results showed that the variable of financial targets as measured by return on asset, external pressure as measured by the leverage ratio, personal financial need as measured by the ownership of shares by the board of commission influence the financial statements fraud. The study did not found financial stability pressures as measured by the ratio of change total asset, ineffective monitoring as measured by the ratio of affiliated commissioner, nature of industry as measured by the ratio of change receivables, the audit opinion as measured by obtaining unqualified opinion with explanatory language, and capability as measured by changes of directors influence on fraudulent financial statements.

ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI TERJADINYA FINANCIAL STATEMENT FRAUD: PERSPEKTIF DIAMOND FRAUD THEORY (Studi Pada Perusahaan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Periode 2014-2016)

This study aimed to analyze the factors that encourage financial statement fraud with analysis of diamond fraud theory. This research analyzes the influence of variable pressure proxied by financial targets, financial stability, external pressure, personal financial need, the opportunity proxied by nature of industry, ineffective monitoring, razionalization proxied by audit opinion, and the capability to replace any directors proxies against financial statements fraud. The sample in this research are 105 samples of banking companies listed on Indonesia Stock Exchange in the period 2014-2016. The results showed that the variable of financial targets as measured by return on asset, external pressure as measured by the leverage ratio, personal financial need as measured by the ownership of shares by the board of commission influence the financial statements fraud. The study did not found financial stability pressures as measured by the ratio of change total asset, ineffective monitoring as measured by the ratio of affiliated commissioner, nature of industry as measured by the ratio of change receivables, the audit opinion as measured by obtaining unqualified opinion with explanatory language, and capability as measured by changes of directors influence on fraudulent financial statements.