Abstract
Fraudulent Financial Reporting Cases in Malaysia: A Descriptive Analysis
Highlights
Fraudulent financial reporting has been an issue of great concern worldwide following the collapsed of once venerable companies such as Enron and WorldCom
Others were related to detection of fraud (Barsky et al, 2003; Kaminski et al, 2004; Persons, 1995; Spathis, 2002); the characteristics that predispose fraudulent financial reporting (Beasley, 1996; Holtfreter, 2005; Lavery et al, 2000; Saksena, 2001; Summers & Sweeney, 1998; Turpen & Messina, 1997); behavioural intention (Carpenter & Reimers, 2005; Yusoff et al, 2020; Weidman et al, 2004); the effect of establishment of audit committee on fraudulent financial reporting (Badolato et al, 2013; Beasley, 1996; Ghafran, 2013; Huang & Thiruvadi, 2010); managerial ownership (Baek et al, 2009; Chen et al, 2006); ownership concentration (Al-Rassas & Kamardin, 2015); motives for fraudulent financial reporting (Kanjanapathy & Hashim, 2019; Lau & Ooi, 2016) and fraud prevention (Azis et al, 2020). To this date, no study in Malaysia has been conducted to explore the background of the companies involved in fraudulent financial reporting and the impacts to the offenders as well as the companies after the fraud was revealed by the regulator
This study attempts to explore the background of the companies involved in fraudulent financial reporting and the impacts to the offenders as well as the companies after the fraud was revealed by the regulator
Summary
According to the 2020 Global study on occupational fraud and abuse which analyzed 2,504 cases between January 2018 and September 2019, fraudulent financial reporting is the least used scheme (10% of cases) yet the costliest category of occupational fraud. It results in median loss of USD 954,000 per case (ACFE, 2020). The third category, corruption which includes offenses such as bribery, conflicts of interest, and extortion falls in the middle in terms of both frequency and financial damage This scheme occurs in 43% of cases and cause a median loss of USD 200,000. Since these three types of fraud are frequently undetected and often never reported, so it is difficult to determine the full scope of global losses
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