Causes, consequences, and deterence of financial statement fraud (original) (raw)
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The business community requires transparent corporate reports to ensure that investment decisions are not based on materially misstated financial statements. This implies that corporate managers, auditors, board of directors, investors and regulatory agencies urgently need to be able to detect and prevent potential earnings frauds. The literature review seeks to improve understanding of the fraudulent financial statement anatomy, its factors, motivations and antecedents-the knowledge of which can improve our detection and prevention ability. The " fraud triangle " is portrayed as an efficient model for understanding antecedents to fraud. Concurring with Zahra, Priem and Rasheed (2005), the paper calls for further research to understand the motivational factors of fraud behaviour as well as adopting forensic accounting techniques to enhance the probability of detecting fraud in a timely, cost effective manner.
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This research examines the potential means available to company managers, auditors and regulators of preventing, detecting and reacting to financial statement fraud. Research is conducted by means of interviews with company managers, auditors and regulators. The findings are, while management integrity and the development of internal systems to prevent fraudulent reporting can help to reduce the probability of financial statement fraud taking place, the nature of financial statement fraud as a crime in which the company is an instrument and not a victim makes it essential that penalties enforced by regulators are used to deter and react to cases where such frauds are detected.
Factors Affecting Fraud Prevention and Its Implication to the Quality of Financial Statements
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The study aims to determine the effect of internal control, internal audit, risk-based audit, audit committee, and whistleblowing system on fraud prevention and its implications to the quality of financial statements. The sample consisted of 7 companies from 12 populations of chemical sub-sector companies and 5 companies from 10 populations of pharmaceutical sub-sector companies listed on the Indonesia Stock Exchange in 2018. Data were collected using questionnaires with 154 respondents. The analysis technique using Structural Equation Modeling (SEM) and processed with Lisrel 8.8. The results indicate that, partially, internal control, internal audit, risk-based audit, and audit committee have a positive and significant effect on fraud prevention, while the whistleblowing system partially has a negative and insignificant effect. However, simultaneously, the direct effect of internal control, internal audit, risk-based audit, audit committee, and whistleblowing system on fraud preven...
Roots of Responsibilities to Financial Statement Fraud Control
Procedia Economics and Finance, 2015
Financial statement fraud cases also occur when weak internal controls exist. Besides these reasons, the research differentiates between the two major types of financial statement fraud. This research discusses the responsibilities of financial statement fraud control by looking at agency theory, stakeholder theory, public interest theory; capital needs theory and communication theory. This discussion is in tandem with the principal investigation of internal control strategies in relation to financial statement fraud control. The output of this paper provides a comprehensive understanding of responsibilities for financial statement fraud control in the context of the above theories and finally contributes recommendations for improvement in financial statement fraud control in public interest entities.