Is accountability a double-edged sword? Experimental evidence on the effectiveness of internal controls to prevent fraud (original) (raw)
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Proceedings of the 4th International Conference on Sustainable Innovation 2020-Accounting and Management (ICoSIAMS 2020), 2021
This research discusses the influence of internal control, financial pressure, and compensation compatibility on the tendency of accounting fraud. Two experiments were conducted to test the effect of these factors. Experiment 1 examined the influence of internal control and financial pressure on the tendency of accounting fraud. Experiment 2 scrutinized the effect of internal control and compensation compatibility on the tendency of accounting fraud. The samples in this study were 122 participants selected using a purposive sampling method. Analysis of Variance (ANOVA) was employed for the hypothesis built in this study. The test results in Experiment 1 revealed that individuals in conditions where there was no internal control tended to commit accounting fraud compared to those in conditions where there was an internal control. The test results also indicated that individuals in financial pressure conditions tended to commit accounting fraud compared to conditions with no internal control. This test's results specified that there was no interaction between internal control and financial pressure on individual decisions in the tendency of accounting fraud. Besides, the test results in experiment 2 proved that individuals who received incompatible compensation were more likely to commit accounting fraud than those who received appropriate compensation. The test results also showed that individuals in the conditions of internal control absence and inappropriate compensation were more likely to commit accounting fraud than those in conditions with internal control. The further additional analysis results disclosed that internal control manipulation in experiment 2 has succeeded in replicating the experiment 1 results.
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Accounting fraud is a problem commonly faced by both companies and users of financial statements. Accounting fraud often occurs due to weak internal controls. In addition, accounting fraud is also influenced by one’s ethics, especially the morality of individuals to cheat. The purpose of this study is to determine the effect of internal control and individual morality on the tendency to commit accounting fraud. This research is done by using experimental method. The sample used in this research is 85 accounting students of Maranatha Christian University. The testing tool used in this study is a two-way Anova. The results show that internal control has no effect on accounting fraud, but individual morality has an effect on accounting fraud. Individual with low morality will tend to commit accounting frauds rather than those with high morality.
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This study aims to obtain evidence to determine whether there are differences in the likelihood to commit fraud between individuals under the conditions of present and absent internal control and between individuals with high and low levels of individual morality. The study also aims to determine whether the interaction between individual morality and internal controls lead to fraud. Results show differences among individuals under the conditions of present or absent internal control to commit fraud. Moreover, there are differences among individuals who have high and low levels of individual morality to commit fraud. Finally, results reveal that the interaction between individual morality and internal controls lead to fraud.
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The focus of the research is to investigate internal control in moderating the effect of variables on the elements of The Fraud Hexagon on fraudulent financial reporting. The sample was selected using purposive sampling at public companies in the construction industry in Indonesia for the period 2016 – 2020. The research hypothesis was tested using Multiple Linear Regression Analysis with SPSS. The results of the study indicate that audit fee have a negative effect on financial statement fraud because low audit fees make auditors not give greater effort to the audit process so that the risk of audit quality is getting lower. Low audit quality makes fraudsters believe that their behavior will not be detected, thereby increasing the possibility of financial statement fraud. Meanwhile, internal control will not work effectively if employees do not have the same perception as the company regarding internal control.
Based on the triangle model of responsibility the effects of fraud type and for fraud detection. The 3x2 address the research questions levels namely fraudulent financial reporting (FFR), misappropriation of assets (MoA) and corruption (CRR and and anonymous (ANN). The p Data analysis conducted results show that there are no significant differences for internal auditors to detect fraud among the three types of fraud. auditors demonstrate a higher perceived responsibility in detecting fraud than anonymous. The implication of this finding suggests that provide clearly guidances and references to detecting fraud in the government agencies area. Pertaining auditor's performance is required in order for the internal auditors to have greater responsibility and effort in detecting fraud Based on the triangle model of responsibility (Schlerker 1994), this study examines the effects of fraud type and accountability on internal auditor perceived The 3x2 between subject experimental design was address the research questions. The fraud type variable was manipulated at three fraudulent financial reporting (FFR), misappropriation of assets (MoA) and the accountability was manipulated as accountable The participants of experiment consits of 92 internal auditor used one-way anova and independent sample t there are no significant differences for internal auditors to detect ud among the three types of fraud. Other results show that the accountable internal a higher perceived responsibility in detecting fraud than The implication of this finding suggests that government agencies might early guidances and references to detecting fraud in the government Pertaining to the role of accountability pressure, auditor's performance is required in order for the internal auditors to have greater ort in detecting fraud. , this study examines perceived responsibility was conducted to was manipulated at three fraudulent financial reporting (FFR), misappropriation of assets (MoA) accountable (ACC) 92 internal auditors. and independent sample t-test.The there are no significant differences for internal auditors to detect the accountable internal a higher perceived responsibility in detecting fraud than government agencies might early guidances and references to detecting fraud in the government review of the auditor's performance is required in order for the internal auditors to have greater Fraud Type; Accountability; Responsibility; Triangle Model of Accountability and Fraud Type Effects on Fraud Detection Responsibility
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Advances in economics, business and management research, 2023
Social pressure causes individuals to behave in a way that deviates from company values. Individuals who experience very strong pressure from both superiors and peers will increase the individual's chances of committing unethical actions (budgetary slack). But on the other hand, several studies show that not all individuals are obedient to social pressure from others. Most individuals, especially accountants, refuse to commit unethical actions even though the threat of very severe punishment awaits. We are interested in analyzing this unique phenomenon. Using experimental research on 90 participants, we found evidence that different levels of individual locus of control can minimize the occurrence of budgetary slack. The results of this study are expected to provide consideration for stakeholders in the financial sector to consider individual personal values as one of the important variables that play a role in budgeting success in companies or organizations.
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Accounting and Business Research, 2020
We extend the literature on accountability in an experimental setting to examine the influence of formal accountability, individual-level perceived accountability and their interactions on accountants' aggressive judgements in China. Individual-level perceived accountability is based on the phenomenological perspective, which recognises that its intrinsic nature is derived from multiple sources known as the 'web of accountabilities' in socialisation processes. Researchers suggest that perceived accountability is fidelity to 'personal conscience' in individuals' moral values and their internal sense of moral obligations. Our findings show that when formal accountability was imposed, accountants were not aggressive in making their reporting judgements, irrespective of their scores on perceived accountability measures. In contrast, when formal accountability was not imposed, accountants who scored higher (lower) on perceived accountability measures were less (more) aggressive in making reporting judgements. Our results further show that imposition of formal accountability is not equally important in influencing the judgements of accountants who scored higher on perceived accountability measures and those who scored lower on those measures. Our findings have implications for determining which accountability frameworks could be developed to assist global standard setters, national regulators and organisations, including accounting firms, constrain aggressive financial reporting so as to improve financial reporting quality.
Mega Aktiva: Jurnal Ekonomi dan Manajemen
This study aimed to get empirical evidence about the mediation tendency of the accounting fraud at the influence the effectiveness of internal control and the information asymmetry on accountability organization. Empirical studies conducted on six Polytechnic State in Makassar namely Politeknik Negeri Ujung Pandang, Makassar ATI Polytechnic, the Polytechnic Studies Polytechnic Sailing and Tourism. Methods of data collection using the questionnaire technique. The number of samples in this study were 59 respondents were selected based on purposive sampling method. This study uses analysis techniques Linear Regression with SPSS version 23.0. The results showed a positive relationship between the asymmetry of information with the tendency of accounting fraud in this sense that, each accounting fraud will likely increase if the asymmetry of information often occurred in an agency. The implication of this research is the asymmetry of information, it will trigger the action of fraud by sta...