Fraud Control Research Articles

Tackling practical issues in fraud control: a practice-based study

PurposeThe purpose of this paper is to provide a warning sign for fraud studies in developing occupational fraud deterrent, and offer possible solution to deal with it.Design/methodology/approachThis study was conducted in one of regencies in Indonesia. The authors interviewed nine top managers across local agencies and four senior local government internal auditors. The people involved have formal and informal networks with a regent who has been arrested by Indonesia’s Corruption Eradication Commission, because of white-collar crime syndicates, when running governmental systems.FindingsWhile many approaches to fraud mitigation have been proposed, organisations in practice particularly in the public sector find it hard to implement successful methods to understand, detect and prevent fraud. In practice, this occurs due to simplified assumption on or multiplicity of overlapping fraud concepts. There is also a lack of appreciation of impact of organisational dynamics which facilitates fraud. Behavioural and political issues within an organisation need to be addressed when proposing fraud prevention. The study emphasises that it is too naïve to offer internal control as one-size-fits-all fraud prevention. For practitioners, corrupt behaviour tends to be the most challenging part, compared to other fraud schemes such as asset misappropriation and financial statement fraud. In this paper, the authors urge organisation to adapt a more systematic approach, involving across governmental anti-corruption agencies and civil society actors. This may be facilitated through communication among those parties, including a sound whistleblowing system. Then, organisation also should consider preventive measures that go beyond from administrative or technical internal controls.Originality/valueThe results may give new directions for designing fraud prevention.

Optimized rapid and reliable identification of Tuber spp. by matrix-assisted laser desorption ionization time-of-flight mass spectrometry.

Intentional substitution of food ingredients and misleading or false declarations of food products can lead to large economic damage in the food sector. An example is the truffle, an edible mushroom, with different species having a similar morphology. This makes it difficult to distinguish, for example, the high-quality black Périgord truffle from Europe and the lower quality black truffle from China. To detect and prevent potential food fraud and to be able to carry out quality assurance measures, the demand for suitable, fast and cost-effective examination methods for individual foodstuffs is increasing. In this article we present a method based on matrix-assisted laser desorption/ionization time-of-flight mass spectrometry (MALDI-TOF MS), which can differentiate and identify commercial truffles. For this purpose, highly specific mass spectrometric fingerprints of 73 truffle tubers from eight different species were generated. These were checked and compared under the criteria of a score evaluation, their protein spectra, and cluster formation. Standard laboratory equipment was used for this purpose, so that apart from the MALDI-TOF no expensive equipment or reagents were required. The study shows that the MALDI-TOF MS method can distinguish and identify Tuber spp. reliably, quickly and efficiently and can therefore be used for quality assurance and fraud control in the truffle market.

Near Infrared Reflectance Spectroscopy Coupled to Chemometrics as a Cost-Effective, Rapid, and Non-Destructive Tool for Fish Fraud Control: Monitoring Source, Condition, and Nutritional Value of Five Common Whitefish Species.

Fish fraud is a problematic issue for the industry. For it to be properly addressed will require the use of accurate, rapid, and cost-effective tools. In this work, near infrared reflectance spectroscopy (NIRS) was used to predict nutritional values (protein, lipids, and moisture) as well as to discriminate between sources (farmed vs. wild fish) and conditions (fresh or defrosted fish). Samples of five whitefish species-Alaskan pollock (Gadus chalcogrammu), Atlantic cod (G. morhua), European plaice (Pleuronectes platessa), common sole (Solea solea), and turbot (Psetta maxima)-including farmed, wild, fresh, and frozen ones, were scanned by a low-cost handheld near infrared reflectance spectrometer with a spectral range between 900 and 1700 nm. Several machine learning algorithms were explored for both regression and classification tasks, achieving precisions and coefficients of determination higher than 88% and 0.78, respectively. Principal component analysis (PCA) was used to cluster samples according to classes where good linear discriminations were denoted. Loadings from PCA revealed bands at 1150, 1200, and 1400 nm as the most discriminative spectral regions regarding classification of both source and condition, suggesting the absorbance of OH, CH, CH2, and CH3 groups as the most important ones. This study shows the use of NIRS and both linear and non-linear learners as a suitable strategy to address fish fraud and fish QC.

Does forensic audit influence fraud control? Evidence from Nigerian deposit money banks

This study examines the importance of the application of forensic audit in controlling financial frauds that ravage or threaten the soundness and business continuity of Deposit Money Banks (DMBs) in Nigeria. The study used survey design methods, and the primary data were obtained through the administration of structured questionnaire covering seventeen (17) banks out of twenty-two (22) Deposit Money Banks (DMBs) operating in the country, which is 77.3%. In this study, the Ordinary Least Squares (OLS) method was used to analyze and test hypotheses, and the findings showed that the involvement of qualified and experienced forensic auditors would not only contribute to the amelioration of financial frauds in DMBs, but would also lead to much-needed sanity in the banking sector of Nigeria. The study recommends that regulatory agencies, within the limits prescribed by law, mandate all the banks to create a special forensic department, managed by a professional forensic auditor, which will develop and constantly implement effective and efficient internal control, timely prosecution of fraudsters by considering them to be criminals and as a deterrent to others, and work out adequate training and development programs for their staff, especially in fraud control, in order to reduce the number of fraud cases in Nigerian banks.

Disclosure of fraud control information in annual reports as a means of discharging public accountability

PurposeThis paper aims to investigate the disclosure of fraud-related activities in public sector organisations in Australia. Specifically, the study reviews and evaluates the level and nature of fraud control information in annual reports of Commonwealth agencies and bodies.Design/methodology/approachThe study uses a qualitative approach with the aim of expanding the body of empirical literature on disclosure of fraud control information in annual reports. The study further uses the theory of accountability – an essential concept for organisations that exist for public interest.FindingsThe results show that there is some prima facie evidence of public accountability. However, these results suggest that current disclosures of fraud-related activities in annual reports are failing to ensure the public is aware of activities used to combat fraud and its implications for the public interest.Practical implicationsThe results have important implications for developing a framework for good reporting of fraud control activities.Originality/valueThis research study adds to the limited body of knowledge regarding how public entities discharge their accountability in relation to their fraud control activities.

Occupational Fraud in Micro-Financial Institutions in Cameroon: Strategies for Timely Detection and Control

Occupational fraud has persistently become a hurtful problem in micro-financial institutions (MFIs) in Cameroon lately. Staff and management of some MFIs are suspended, terminated, or litigated after they are suspected of involvement in occupational fraud over the years. Such delayed detections have caused huge losses to the organisations. In this respect, a study was carried out to examine strategies for timely detection and control of occupational fraud in MFIs in Cameroon. An online survey was opened to experienced certified fraud examiners and auditors to give their experiences of strategies for timely occupational fraud detection and control in micro-financial institutions in Cameroon. The data generated was analysed, regressed, and interpreted to produce empirical results that MFIs in Cameroon apart of installing sound internal control systems, need to adopt and implement monitoring and surprise audits, tips and notifications, rotation of duty and abrogation of paid annual leave in order to secure timely detection and control of occupational fraud before it wreaks heavy losses on the institution. Furthermore, MFIs in Cameroon are cautioned to use information technology control and surveillance strategies with reservation because the facilities that support their operation are poorly developed, yet politicised. MFIs should not hope to discover an occupational fraud through accidents and/or a confessions. They are encouraged to treat their workers fairly but bearing in mind that no matter how well workers are kept comfortable occupational fraud could still be committed by management and staff who suffer from insatiable greed and/or psychosis.

Validation of a Quantitative Proton Nuclear Magnetic Resonance Spectroscopic Screening Method for Coffee Quality and Authenticity (NMR Coffee Screener).

Monitoring coffee quality as a means of detecting and preventing economically motivated fraud is an important aspect of international commerce today. Therefore, there is a compelling need for rapid high throughput validated analytical techniques such as quantitative proton nuclear magnetic resonance (NMR) spectroscopy for screening and authenticity testing. For this reason, we sought to validate an 1H NMR spectroscopic method for the routine screening of coffee for quality and authenticity. A factorial experimental design was used to investigate the influence of the NMR device, extraction time, and nature of coffee on the content of caffeine, 16-O-methylcafestol (OMC), kahweol, furfuryl alcohol, and 5-hydroxymethylfurfural (HMF) in coffee. The method was successfully validated for specificity, selectivity, sensitivity, and linearity of detector response. The proposed method produced satisfactory precision for all analytes in roasted coffee, except for kahweol in canephora (robusta) coffee. The proposed validated method may be used for routine screening of roasted coffee for quality and authenticity control (i.e., arabica/robusta discrimination), as its applicability was demonstrated during the recent OPSON VIII Europol-Interpol operation on coffee fraud control.

Moderating Effect of Government Regulations on Internal Control System and Fraud Prevention. A Case Banking Sector in Kenya

The main purpose of the study was to establish the moderating effect of government regulations on the relationship between internal control system and fraud prevention in baking sector. Structured questionnaire was used as tool for data collection. The study was based on all banks registered and operating in Kenya and the questionnaires were meant for branch managers, operations mangers and cash managers in head offices of all banks. One hundred and seventeen questionnaires were distributed and officers from 33 banks out 39 banks returned fully filled questionnaires. The questionnaires were analyzed using Structural equation Model (SEM). The findings indicated that the government regulations have significant moderating effect of control environment and risk assessment. However, there was insignificant moderating effect on control activities, communication and monitoring of activities. The study suggested that further studies and analysis should be undertaken to establish those legislations and regulations that should be enhanced, abolished and also establish need of new laws to enhance the functions of internal control system.

Pengaruh Kompetensi SDM dan Locus Of Control Pada Pencegahan Fraud dalam Pengelolaan Dana Desa

This research is aimed to acquire the empirical evidence of the influence of human resource competencies and locus of control on fraud prevention in the management of dana desa. This research has been selecting all of the 27 desa dinas in denpasar as the population. 108 respondent were collected as the sample. One of the non-probability sampling using census to obtained the data. Multiple linear regression technique analysis is applied to analyzing the data. This research shows that human resource competencies and locus of control, have given such an positive impact to the fraud prevention in the vilaage fund management .
 Keywords : Human Resource Competencies ; Locus Of Control Fraud.

Should We Do More to Police Medicaid Fraud? Evidence on the Intended and Unintended Consequences of Expanded Enforcement

Medicaid Fraud Control Units (MFCUs) are state agencies that investigate and prosecute health care provider fraud, using billing data to decide who to investigate. In particular, providers that submit a large number of claims for a set of fraud prone services are more likely to be investigated. We study the effect of within-state changes in MFCU spending on enforcement outcomes and hospital treatment intensity for fraud prone health conditions in the Medicaid population. We find that increases in MFCU spending substantially increase fraud enforcement actions (investigations, convictions, recoveries). In contrast, MFCU spending increases do not generate substantial changes in treatment intensity for fraud prone health conditions. We find no evidence that MFCUs with expanded budgets investigate less severe cases on the margin.

PENGEMBANGAN PASAR TRADISIONAL SONGGOLANGIT PONOROGO: TINJAUAN PERSPEKTI EKONOMI ISLAM

This study aims to analyze traditional market development Songgolangit Ponorogo from an Islamic economic perspective. This study used a qualitative method. Qualitative methods are used to analyze the role of traditional market development from the perspective of Islamic Economics. Including data tecnic by copersition, dokumentation, and Focus Group Discossion. The results of this study indicate that the management of the Songgolangit market is good. Development of the Ponorogo Songgolangit traditional market through the stages of planning, organizing, field action, supervision and evaluation. Market development in Islamic perspectives includes price monitoring, fraud control, general supervision, quality control and halal goods, control of stockpiling, and control of prohibited transactions. Local governments play an important role in supervision and need to work together with the MUI in forming "rijalu-n-nisbah" in traditional markets.

IMPLICATIONS OF ISLAMIC GOVERNANCE ON ISLAMIC BANK FRAUD

This study was conducted to test fraud at Islamic banks in terms of Islamic Good Corporate Governance. The research data uses Islamic banks registered at Bank Indonesia from 2017 to 2018. Data of the board of directors, board of commissioners, implementation of internal controls, and the sharia supervisory board were obtained from the composite index of self assessment in GCG report. This study did not succeed in accepting that the board of directors and board of commissioners have a negative effect on fraud and proved of the negative influence of internal controls and the sharia supervisory board on fraud. The sharia supervisory board is indeed a decisive element for fraud control from the conformity aspects of implementing Islamic bank operations. The board of directors is an external party of the company that is not directly involved in the company's operations

Differentiation and authentication of fishes at the species level through analysis of fish skin by matrix-assisted laser desorption/ionization time-of-flight mass spectrometry.

Authentication of fish is of importance in the view of toxins, allergen warnings and economic fraud control. Traditional methods in the authentication of fish, e.g. morphological, genetic and proteomic analysis, are either at low throughput or at high-cost. A high-throughput matrix-assisted laser desorption/ionization time-of-flight mass spectrometry (MALDI TOF MS)-based approach was developed to analyze biomaterials from fish skin, and mass spectra from different fish species were compared by chemometric methods to differentiate fish species. A total of 51 fish samples were used to generate more than 150 fingerprinting mass spectra. The fish belonging to the same genus can be identified at species level. A mass spectral database of different fishes can be built as reference for authentication. The analysis can be performed based on micrograms of fish-skin sample and accomplished in 1-3 hours. The developed strategy holds potential to be applied to fish authentication in the fishing industry and as a scientific method to avoid mislabeling. It has promise to be practically used for fast and effective identification of closely related fish species to guarantee the quality of fishery products to consumers.

The rise of microcredit ‘control fraud’ in post-apartheid South Africa: from state-enforced to market-driven exploitation of the black community

ABSTRACTThe end of apartheid in South Africa in the early 1990s did not see the envisaged end to the exploitation of the black South African population, but instead saw simply a shift from state-backed exploitation to market-driven exploitation. This trajectory is especially germane to the country’s microcredit industry, which has spectacularly and wilfully enriched a narrow white male elite while simultaneously helping to fragment and destroy the local rural and urban economies of the black poor. As this article demonstrates, a major aspect of this one-sided enrichment process has involved ‘control fraud’, the process whereby the CEO and senior management of a financial institution use their seniority to defraud customers, shareholders, the government and the general public as they go about maximising their own private short-term financial gains. Already a problem elsewhere in the global South, South Africa has thus joined the growing list of countries that have seen control fraud in the microcredit sector undermine and block progress towards more productive, sustainable and equitable local economies.

Analysis of a PBX Toll Fraud Honeypot

Organisations are moving over from legacy telecommunications to Voice over IP (VoIP), enabling greater flexibility, resilience and an overall cost reduction. Session Initiated Protocol (SIP) is considered to be the main VoIP protocol in the business–to-business market, but the correct implementation and configuration is not always well- understood. The failure to configure SIP systems correctly has led to significant fraud exploiting a range of vulnerabilities and billions of dollars every year being stolen from companies of all sizes through PBX Hacking via the medium of Toll Fraud. Previous research into this area is now dated but suggested fast-changing approaches by attackers. Industry organisations such as the Communications Fraud Control Association (CFCA) acknowledged this is a fast-growing problem. To quantify the size of the current problem, a Honeypot experiment was undertaken using a popular phone system used by businesses. The Honeypot ran for 10 days and recorded just under 19 million SIP messages. This research has identified attackers are using various sophisticated methods to attempt to gain access and trick a PBX into making calls. When comparing previous research, the rate of attack is approximately 30 times more aggressive and the countries from where attacks originate are distributed over 75 countries.

Nontargeted Analytical Methods as a Powerful Tool for the Authentication of Spices and Herbs: A Review.

Food fraud in herbs and spices is an important topic, which has led to new technologies being studied as potential tools for fraud identification. Nontargeted technologies have proven to be a useful tool for the authentication of herbs and spices. The present review focuses on the use of near-infrared, hyperspectral imaging, Fourier-transform infrared, Raman, nuclear magnetic resonance, and electron spin resonance spectroscopy for the authentication of spices, which includes the determination of origin and irradiated spices and the identification of adulterants. The methods developed based on vibrational spectroscopy combined with chemometric techniques seem to be promising tools for determining the presence of adulterants and contaminants in herbs and spices. On the other hand, nuclear magnetic resonance seems to be the most efficient technology to determine the origin of herbs and spices although, for some cases, studies with near-infrared spectroscopy can be a viable substitute. Electron spin resonance spectroscopy is the technique par excellence used for the authentication of irradiated herbs and spices, so its use should be expanded to many more spices' varieties. Portable devices are preferred by those involved in the food industry, due to its manageability and low cost. Data fusion and big data are shown as promising tools for spice fraud control. In conclusion, spectroscopic techniques show a great efficiency to authenticate spices, although their evaluation must be expanded to other spice varieties, to new strategies of data analysis (as data fusion and big data), and to the use of portable devices.

Pengaruh Sistem Pengendalian Internal Terhadap Pencapaian Good Government Governance Melalui Pencegahan dan Pengungkapan Fraud

This study examines the extent of perception of government’s internal auditors (BPKP) in assessing the ability of the government's internal control system (SPIP) to detect and prevent fraud and encouraging the achievement of Good Government Governance (GGG) in the government agencies. Using the survey method to BPKP auditors at the South Sulawesi representative office and the PLS approach as a statistical tool, empirical facts were found, SPIP had a significant effect on the fraud prevention, fraud disclosure, and achievement of GGG. Moreover, Fraud Control Plan (FCP) also has a significant influence on the achievement of GGG. These results indicate the importance of periodically evaluating the effectiveness of SPIP and FCP by BPKP, in order to doing further improvement of these systems for reaching the GGG.

Accountants Perception on Effectiveness of Corporate Fraud Detection and Prevention Methods in Ghana

The purpose of the study is to find out the perceptions of Accountants and Auditors on effectiveness of corporate fraud detection and prevention methods among selected financial Institutions in Ghana. The population samples of the study comprising Accountants and Auditors in a selected financial Institutions in Ghana using a structured survey of questionnaires.It was revealed in the study that, organizational quite utilized data mining, digital analysis, internal Control and improvement and fraud prevention and detection training in combating fraud. However, the findings also shows that, organization use of password protection, Cash Review, Annual Auditing, Whistle blowing policy were less often utilized even though having the highest rating of effectiveness. Accountants, Auditors and management of Financial Organizations should considering using the most effective prevention and detection methods like Cash Review, Annual Auditing, whistle blowing and installation of Password protection on computers based on the findings.The study contributes to the literature on the effectiveness of fraud detection and prevention methods particularly for West African Countries and other emerging nations. The study may be terrific to Practitioners regarding the assessment of the contemporary level of fraud detection and prevention methods on financial Institutions in Ghana and beyond.

Detection of adulterants in grape nectars by attenuated total reflectance Fourier-transform mid-infrared spectroscopy and multivariate classification strategies

There is no any doubt about the importance of food fraud control, as it has implications in food safety and in consumer health. Focusing on fruit beverages, some types of adulterations have been detected more frequently, such as substitution with less expensive fruits. A methodology based on attenuated total reflectance Fourier-transform mid-infrared spectroscopy (ATR-FTIR) and multivariate classification was applied to detect whether grape nectars were adulterated by substitution with apple juice or cashew juice. A total of 126 samples were obtained and analyzed. Two strategies were proposed: one-class and multiclass approaches. Soft independent modeling of class analogy (SIMCA), partial least squares discriminant analysis (PLS-DA) and partial least squares density modeling (PLS-DM) were used to build the models. Among them, PLS-DA presented the best performance with a sensitivity and specificity of nearly 100%. The multiclass strategy was preferred if the adulterants to be studied are known because it provides additional information.

Strategies to overcome the crisis and leverage the legal control of measuring instruments in Brazil

The economic crisis in Brazil, has led to the reduction of the services regarding periodic verifications in legal metrology, however it has been an opportunity to incentive the initiatives focusing the efficiency of the legal metrological control in Brazil. The present study presents the impact of the reduction of the budget allocate to legal metrology and the initiatives carried out by the National Institute of Metrology, Quality and Technology – INMETRO, and the Brazilian Network of Metrology and Quality – RBMLQ-I, in order to leverage the efficiency the services provided in legal metrology to the commerce and industry. A survey with specialists working in the sector was conducted in order to identify strategies to improve the performance of the services in legal metrology. As a result, we present and discuss the main proposed strategies, such as partnership with either different regulatory bodies or private enterprises, fraud control and the development of information systems. The presented strategies aims to improve the legal control of measuring instruments more efficiently.