Proposed Financial Statement Fraud-Risk Assessment

Abstract

The fraud occurred in three different ways: lack of awareness of acting fraudulently (by error), awareness of acting fraudulently coupled with rationalization to avoid negative affect or emotion (individual’s intuition support committing a fraud), or awareness of acting fraudulently coupled with reasoning through cost-benefit analysis (individual’s intuition unclear) (Murphy & Dacin, 2011). The fraud is a worldwide, multifaceted phenomenon, whose contextual factors may not fit into a particular framework (Lokanan, 2015). The management fraud, like any other human behavior, is an intentional, complex, multidimensional act that results from multiple interactive factors (Hutchison, 2013). It can be viewed from different theoretical perspectives such as systems, conflict, rational choice, social constructivist, social behavioral, psychodynamic, and developmental perspectives (Hutchison, 2013). The human behavior is influenced by several factors such as intrapersonal (attitude, values, belief, and personality traits), social (social norms and controls), institutional (policies, laws, rules and regulations), and ethical factors (personal moral value and organization value/culture) (Murphy & Dacin, 2011). The management fraud can be viewed as a decisional, behavioral, cognitive, societal, emotional, or ethical phenomenon.