Financial Fraud Detection and the Importance of Internal Control

In an environment that is becoming increasingly unstable due, primarily, to new international requirements and rapid changes, the problem of financial fraud detection has grown in importance. One of the main causes is the growing dependence on new technologies. This environment has required companies to adapt to face the new constraints. In fact, financial fraud is a problem that has a profound impact on the financial industry, government, businesses and ordinary consumers. The objective of this paper is double: the first one is to study the explanatory factors and the main variables developed in order to better detect the existence of financial fraud and we have emphasized the importance of taking into account non-accounting variables in the detection of financial fraud which remains little treated by empirical studies. The second objective of this research is to emphasize the importance of internal control, through a literature review, in the fight against financial fraud.

A Comparative Financial Ratio Analysis Between Conventional and Islamic Banks in GCC

Banking framework establishes the central mainstay of any economy. Banks functions as monetary conduits between sectors that have abundance reserves and those that are in deficiency. The historical backdrop of banking in the Gulf Cooperation Council (GCC) traces all the way back to 1918 with the foundation of the primary bank in Bahrain. The territorial financial evolution is attributable to oil abundance and loaning business that spotlights on building, land and client advances. Throughout the long term, the financial framework worldwide has advanced in its contributions to suit the changing customer requests. One of the essential determinants of this change came about because of the strict convictions of individuals bringing about the remarkable development of Islamic Banking System. The prevalence of these banks are in nations with critical Muslim populace like Iran, Pakistan and Sudan but not limited to them. Islamic banks work under Sharia standards of hazard sharing and premium preclusion as appeared differently in relation to customary banks that purchase cash-flow to pool assets and offer cash-flow to produce revenue pay or benefit. This paper applies banks' endogenic elements identified with their monetary record and pay explanation and utilizing an aggregate of 24 financial ratios relating to the banks’ performance and seeks to thoroughly analyze the same among customary and Islamic banks. This examination clarifies the design, activity and the board of traditional banks in the GCC combined with the working of Islamic banks. The paper likewise intends to decide the beneficial and proficient banks among the chosen sample. The study incorporates 20 institutions, similarly dispersed among Islamic and customary banks utilizing information between the time of 2014 - 2017. The example is comprehensively ordered dependent on benefit ratios, proficiency ratios, asset indicator ratios and risk ratios. Further sub categorization is done to show up at an aggregate of 24 ratios. An independent T-test is used to determine a substantial ratio between Islamic and conventional banks.

The Impact of Total Quality Management on E-Government Implementation in Jordanian Governmental Institutions

The primary goal of this research is to examine the impact of TQM and e-government on service quality within Jordanian public sector entities. To achieve the study's goal, a self-administered form was designed to elicit the opinions of seventy middle and senior managers from five government agencies.The study's significance stems from its arrangement to clarify the impact of Total Quality Management and data technology collaboration on public-sector reform programs. Specifically, to assess the impact of the integrated relationship between the use of e-government and TQM on the quality of service provided by Jordan's public sector.The study's findings revealed that the establishments studied used completely different dimensions of total quality management throughout the implementation of some stages of e-government. The findings also revealed a direct relationship between the development of Total Quality Management and e-government and service quality. Lastly, the study established the relationship and impact of the interaction between the application of TQM and e-government on public and service sector in Jordan.

Financial Statement Fraud: Challenges and Technology Deployment in Fraud Detection

Fraudulent financial reporting and other forms of earnings misstatement are catastrophic and pose a considerable threat to capital market stability. This study reviews the literature on existing technology-based methods of detecting financial statement fraud. The aim is to describe the challenges of predicting a rare fraud event and provide an understanding of the various data-mining based techniques for financial statement fraud detection. Given that fraudsters are becoming more adaptable and are constantly devising new ways to outwit the fraud detection system, the study provides directions for future research in detecting the evolutionary fraudulent financial reporting.

Before the Ink Is Dry: Does Sustainability Reduce Earnings Management? Theoretical Perspective

This paper reviews the field of sustainability to develop insights into earnings management studies and outline future research opportunities. We find that most previous studies use integrated reports measured by three dimensions of social, economic and environmental sustainability. These three dimensions are interrelated and communicate with each other to formulate the definition of sustainability. And the sustainability report should provide a balanced disclosure of sustainability performance, including both positive and negative contribution. This paper offers an insightful analysis into sustainability disclosure to support the analysis of IR benefits to balance the current literature that overlooks the benefits of IR.

Stock Market Volatility and Recent Crises

We study the volatility of the US stock market and its sectors as defined by S&P before and after four recent crises: the Mexican crises, the Asian crises, the Dotcom crises and the Great Recession. We compare the increase in daily volatility with the increase in the implied daily volatility (derived from the monthly volatility) to determine if there was a lasting economic effect of each crisis or the increase in volatility was due to financial transitory components. We find that for each crisis the effect was different even though the increase in volatility was present for most of the crises in the post crises period. The paper helps investors and economic policy makers understand what the response to each crisis should be to stabilize the economy.

Asymmetric Cost Behavior Across Life Cycle Stages

The traditional model of cost behavior has been criticized for its symmetric cost behavior assumption. A new model has been proposed assuming that costs respond differently to upward and downward activity changes. The main objectives of this paper are to investigate the existence, degree, and nature of asymmetric cost behavior (ACB) phenomenon and examine how the organization life cycle (OLC) affects this phenomenon in the context of Egypt. The current study achieves these objectives by employing multiple regression to explore the behavior of cost of goods sold (COGS), selling, general and administrative cost (SGA), and total cost (TC) for 1577 firm-year observations (99 manufacturing firms) during the period from 2000 to 2019. The results demonstrate that all three cost proxies (COGS, SGA, and TC) are sticky with the highest degree of stickiness to TC. In addition, OLC is a conditional factor that affects how costs behave in response to change in activity level. Consistent with theoretical propositions, both COGS and TC exhibit anti-stickiness behavior for firms in the introduction stage and stickiness behavior for firms in the growth, mature, and shakeout/decline stages. However, SGA is only sticky for firms in the mature stage. However, the hypotheses related to asymmetric behavior of SGA were rejected for firms in the introduction, growth, and shakeout/decline stages.

Finding an Easier Way to Explain the Statement of Cash Flows

The statement of cash flows is one of the required financial statements of public companies, and thus is required of all accounting majors. After learning the other required financial statements in an introductory financial accounting course and, again, in the first intermediate accounting course, accounting majors learn how to prepare the statement of cash flows in the second or last intermediate accounting course. Most accounting majors find the statement of cash flows significantly more difficult to learn than any other financial statements. Especially, students find it most difficult to understand the indirect method of preparing the statement of cash flows. Preparing the statement of cash flows using the indirect method, students go through the most difficult time, specifically, doing the adjustments that are made to net income to reconcile to cash flows from operating activities.In this paper, presented is a different way to explain the principles of indirect method of preparing the statement of cash flows with a focus on the reconciliation of net income to cash flows from operating activities. Different from the explanations in the textbooks available in the market, the approach presented in the paper is preferred by all the students who were taught the statement of cash flows. Also, pointed out in the paper are a few things that students are easily confused of in learning the statement of cash flows.

The Moderating Effect of the Presence of Female Executives on the Relationship Between Accounting Conservatism and Cash Holdings

This paper aims to providing evidence for a relationship that could be established between accounting conservatism and cash holdings and to integrating the moderating effect of the presence of women directors on this relationship. The study was carried out on a sample of 100 French companies listed in the SBF120 index over a 5 year period. In general, the results show that the effect of accounting conservatism on the holding of liquidity is positive and significant and that the role of female administrators reinforces this relationship.

Credit Risk and Disclosure Behavior in the Bank Industry: Evidence From Saudi Arabia

This study investigates the extent of credit risk disclosure and the effects of bank-specific attributes on the disclosure level of Saudi listed banks. The study considers the content analysis of 12 Saudi listed banks from 2016 to 2020. A comprehensive credit risk disclosure index is developed, covering seven dimensions to measure the levels of credit risk disclosure. The generalized linear model is used to examine whether bank-specific attributes could explain any differences in disclosure levels among banks. This research provides evidence that although banks have similar regulatory requirements, they differ in their credit risk disclosure. The empirical results indicate that few bank-specific attributes significantly influence the risk disclosure. Bank size and leverage positively affect risk disclosure. Therefore, banks’ asset size is a key factor in all risk disclosure categories. In contrast, the results show that a bank’s age and profitability have no impact on the level of credit risk disclosure. This paper contributes to the risk disclosure literature in Saudi Arabia. Understanding factors that affect the level of credit risk disclosure might help the regulators to formulate strategies and policies, enabling shareholders and investors to make informed decisions.