Knowledge Of Fraud Research Articles

Risk factors for fraud victimization: The role of socio-demographics, personality, mental, general, and cognitive health, activities, and fraud knowledge

Fraud against individuals is a major and growing problem. Understanding why some people fall victim to fraud, while others do not, is crucial in developing effective prevention strategies. We therefore studied the effect of socio-demographics, personality traits, mental, general, and cognitive health, routine Internet activities, and prior fraud knowledge on general fraud victimization, susceptibility to fraud attempts, and exposure to fraud attempts. We modeled data from a Dutch fraud victimization survey, using an exhaustive fraud taxonomy and a representative sample for which an elaborate set of historical background variables were available. Results show that there is no clear personality or other profile of those most at risk for fraud, except for having low self-control, having a non-Western, immigrant background or being a frequent Internet user. Improving fraud knowledge could be an effective way to prevent fraud victimization by reducing susceptibility to attempts.

In their own words: deception detection by victims and near victims of fraud.

Research on deception detection has usually been executed in experimental settings in the laboratory. In contrast, the present research investigates deception detection by actual victims and near victims of fraud, as reported in their own words. Our study is based on a nationally representative survey of 11 types of (mostly) online fraud victimization (N = 2,864). We used qualitative information from actual victims and near victims on why they didn't fall for the fraud, or how, in hindsight, it could have been prevented. The main detection strategies mentioned by near victims (N = 958) were 1) fraud knowledge (69%): these near victims clearly recognized fraud. Other strategies related to fraud knowledge were: noticing mistakes (27.9%), rules and principles about safe conduct (11.7%), and personal knowledge (7.1%). A second type of strategy was distrust (26.1%). A third strategy was 'wise through experience' (1.6%). Finally, a limited number of respondents (7.8%) searched for additional information: they contacted other people (5.5%), sought information online (4%), contacted the fraudster (2.9%), contacted their bank or credit card company (2.2%), or contacted the police (0.2%). Using knowledge as a strategy decreases the probability of victimization by a factor of 0.43. In contrast, all other strategies increased the likelihood of victimization by a factor of 1.6 or more. Strategies generally were uncorrelated, several strategies differed by type of fraud. About 40% of the actual victims (N = 243) believed that their victimization might have been prevented by: 1) seeking information (25.2%), 2) paying more attention (18.9%), 3) a third party doing something (16.2%), 4) following safety rules or principles, like using a safer way of paying or trading (14.4%), or by 5) 'simply not going along with it' (10.8%). Most of these strategies were associated with a higher, not lower, likelihood of victimization. Clearly, knowledge of fraud is the best strategy to avoid fraud victimization. Therefore, a more proactive approach is needed to inform the public about fraud and attackers' modus operandi, so that potential victims already have knowledge of fraud upon encountering it. Just providing information online will not suffice to protect online users.

ANALISIS PENGENDALIAN INTERNAL, KESADARAN ANTI-FRAUD, DAN PENGETAHUAN FRAUD TERHADAP PENCEGAHAN FRAUD

Analyzing and empirically testing the influence of internal control, anti-fraud awareness, and fraud knowledge on fraud prevention is the purpose of this study. Internal control variables, anti-fraud awareness, and fraud knowledge are independent variables and fraud prevention are the dependent variables of this study. The study used quantitative methods with primary data as a data source through the dissemination of questionnaires. All organic employees of 35 employees in the Branch Office of Bank Rakyat Indonesia (BRI) Surabaya Pahlawan are the population used in this study. The use of saturated sampling techniques by designating the entire population as a sample is a sampling technique used in this study. Multiple linear analysis is an analysis technique used that is processed with the help of SPSS version 22. The results revealed that internal control has no influence on fraud prevention. However, anti-fraud awareness and fraud knowledge have a positive influence on fraud prevention.

Detecting Fraud Job Recruitment Using Features Reflecting from Real-world Knowledge of Fraud

A common method for text-analysis and text-based classification is to process for term-frequency or patterns of terms. However, these features alone may not be able to differentiate fake and authentic job advertisements. Thus, in this work, we proposed a method to detect fake job recruitments using a novel set of features designed to reflect the behavior of fraudsters who present fake information. The features were missing information, exaggeration, and credibility. The features were designed to represent in the form of a category and an automatically generatable score of readability. Data from EMSCAD dataset were transformed in accordance with the designed features and used to train a detection model for fake job detection. The experimental results showed that the model from the designed features performed better than those based on the term-frequency approach in every applied machine learning technique. The proposed method yielded 97.64% accuracy, 0.97 precision and 0.99 recall score for its best model when used for classifying fake job advertisements.

Comprehensive Study of The Effects of Forensic Accounting on Stock Market Management

Forensic accounting is a branch of study that combines knowledge of fraud with financial abilities as well as an in-depth understanding of corporate realities and the operation of the legal system to produce a highly specialised professional. It is possible that forensic accounting will prove to be the most successful and cost-efficient technique of reducing and eradicating accounting fraud. Companies must have robust internal control systems in place to gather and verify the various types of information required for these disclosures. This will ensure that issuers and their boards of directors make complete, accurate, and timely disclosures of both financial and nonfinancial information to the public. The disclosures made by issuers are used to inform investment decisions by both investors and management, making these internal controls essential.

The forensic professional’s perspective on fraud and fraud detection

As banks and other financial institutions become increasingly complex and rely more heavily on remote and online services, they face an ongoing and ever-changing challenge presented by fraudsters who also have devised increasingly sophisticated methods to commit fraud. An effective compliance and fraud risk management programme must incorporate better and more sophisticated ways to meet the challenge of fraud. To this end, most organisations are increasingly turning to data analytics to help devise better methods to prevent and detect fraudulent activities. At the core of this effort to develop technology solutions to combat fraud are the skills, experience and competencies of forensic professionals. It is essential that any fraud risk management programme rely upon and leverages the diverse expertise of forensic professionals who will have the industry expertise, understanding of regulatory mandates, knowledge of fraud and their red flags and the various schemes devised to commit fraud. These professionals must also possess the investigative and forensic accounting acumen to detect fraud and the data analytic competency to help programmers and data scientists devise the rules and algorithms required to detect fraud and, ultimately, the ability to identify and investigate the data anomalies that will result and require further analysis. This paper discusses the unique perspective and expertise of the forensic professional, the nature of fraud, the forensic fraud detection process, sample banking fraud schemes and how the forensic competencies inform and enhance the power of data analytic processes from rules-based to artificial intelligence (AI) and predictive analytics.

Fraud interpretation and disclaimer audit opinion

PurposeFinancial transactions fraud (FTF) and financial statements fraud (FSF) grew exponentially during the past decades coupled with complex and sophisticated technological developments. This study aims to investigate the practitioners’ interpretation of fraud with recurring audit issues in the disclaimer audit opinions (DAOs) reports within the Solomon Islands public sector (SIPS).Design/methodology/approachThe empirical study involves qualitative data analysis. The analysis alongside theoretical developments is informed by the “fraud triangle” theory.FindingsThe research results revealed the practitioners’ acknowledgement of FSF, FTF and fraud in the SIPS, as generally prevalent and aligned to some components of the fraud triangle theory. This study is sceptic about the good intentions of the International Public-Sector Accounting Standards –Cash-basis framework and favours the Provincial Government Act 1997 and the Public Finance Management Act 2013 requirements. It further suggests that fraud is positively linked to repeated audited report issues and the executive management when DAOs issues appear repeatedly in annual audit reports.Originality/valueThis study contributes to the literature on fraud and attempts to link the interpretation of fraud with recurring audit issues in the DAOs reports in the SIPS. It views fraud awareness and knowledge from the perspective of the audit practitioner. There is an increasing need to understand how fraud knowledge impacts decision making and the actions of auditors and others, an area that is underdeveloped.

PENGARUH PERSEPSI PELAYANAN PEGAWAI PAJAK, PENGETAHUAN FRAUD WAJIB PAJAK DAN TIMBAL BALIK PEMERINTAH TERHADAP KEPATUHAN PAJAK OLEH WAJIB PAJAK (Studi pada wajib pajak orang pribadi Kabupaten Demak)

This study measures the influence of perceptions of employee tax services, taxpayer knowledge about fraud and reciprocal government tax compliance by taxpayers in Kabupaten Demak. Sample in this research as many as 100 people taxpayer personal cross profession registered in KPP Demak. This study used questionnaire instrument. This research concludes, firstly, the perception of service tax officers have a positive effect on tax compliance, which means the better served, taxpayers more obedient. Second, the knowledge of fraud has an effect on tax compliance, meaning that the taxpayer understands about cheating and the consequences of fraud, they are more obedient. Third, the reciprocal government does not affect taxpayer compliance, meaning that taxpayers will remain obedient to pay taxes even if they do not get reciprocity.Keywords: Tax Service, Fraud Knowledge, Government Reciprocity, Tax Compliance

Knowledge of Fraud and Taxpayer Compliance

Fraud is a unique crime committed by many people in various activities including in the tax sector that resulted in losses to the state. A research conducted in 2015 aimed at examining the factors that influence the taxpayer compliance in paying taxes with knowledge of fraud as a moderating variable. This research used Banguntapan city taxpayers as respondents. Sample collection method in this research used the convenience sampling method. The analytical tool used is Structural Equation Model (SEM) with the help of SmartPLS software. The results of this research prove that tax sanctions, service quality, and tax penalties have a positive effect on taxpayer compliance. The results of this research also prove that taxpayer knowledge does not positively affect the taxpayer compliance and also prove that the taxpayer interaction and knowledge of fraud have a positive effect on their tax paying compliance. So the implications of this research expect that tax authorities can apply tax laws in which including sanctions and taxes penalties evenly in each level of the taxpayers and improvement of services in the field of taxation in the form of provision of information to the taxpayers.Fraud is a unique crime committed by many people in various activities including in the tax sector that resulted in losses to the state. A research conducted in 2015 aimed at examining the factors that influence the taxpayer compliance in paying taxes with knowledge of fraud as a moderating variable. This research used Banguntapan city taxpayers as respondents. Sample collection method in this research used the convenience sampling method. The analytical tool used is Structural Equation Model (SEM) with the help of SmartPLS software. The results of this research prove that tax sanctions, service quality, and tax penalties have a positive effect on taxpayer compliance. The results of this research also prove that taxpayer knowledge does not positively affect the taxpayer compliance and also prove that the taxpayer interaction and knowledge of fraud have a positive effect on their tax paying compliance. So the implications of this research expect that tax authorities can apply tax laws in which including sanctions and taxes penalties evenly in each level of the taxpayers and improvement of services in the field of taxation in the form of provision of information to the taxpayers.

Effects of Stories and Checklist Decision Aids on Knowledge Structure Development and Auditor Judgment

ABSTRACTThe purpose of this paper is to compare the usefulness of a story versus traditional checklist decision aids for enhancing knowledge structure development and for improving the judgments of auditors related to fraud risks. The results from the first experiment indicate that novice participants who read stories develop knowledge structures that more closely resemble the knowledge structures of experts than do participants who read checklists. The second experiment reveals that auditors who read stories make judgments more like experts than do auditors who use checklists. The findings demonstrate that stories may have the capacity to train auditors and improve their judgments. Audit firms constantly seek methods to improve auditors' knowledge and judgments, and our findings suggest opportunities for firms to employ fraud stories to enhance knowledge of fraud and improve professional judgment. This study's results hold important implications for the design of training materials, decision aids, and knowledge management systems.

FRAUD RISK ASSESSMENTS: AN EMPIRICAL ANALYSIS

This paper provides the theoretical review of the fraud risk characteristics, systematization of the existing fraud knowledge and the causes of fraud occurrence. Moreover, it determines the roles and the responsibilities of managers and auditors in the fraud risk assessments. In addition, risk factors relating to the misstatements arising from fraudulent financial reporting have been examined. According to the results of numerous scientific and expert studies it is obvious that a system of internal controls, including fraud risk assessments as an elementary component of this system, contributes to reducing fraud occurrence. In order to gain information about the factors that could cause fraudulent financial reporting, the empirical research has been conducted on the sample of companies operating in the Republic of Croatia. The respondents, accountants and auditors, revealed how often they meet fraud risk factors. Although, according to respondents' answers, companies rarely encounter circumstances that indicate the possibility of fraud, the obtained data imply that there are possibilities that financial statements contain misstatements as a result of fraud. Examples of circumstances indicating the possibility that the financial statements contain a material misstatement resulting from fraud include: last-minute adjustments that significantly affect financial results, followed by transactions that are not recorded in a complete or timely manner or are improperly recorded as to amount, accounting period, classification, or entity policy and unsupported or unauthorized balances or transactions. The problems, which the accountants most frequently encountered were undue time pressures imposed by management to resolve complex or contentious issues, an unwillingness to address identified deficiencies in internal control on a timely basis and missing documents.

The Role of "Tone at The Top" and Knowledge of Fraud on Auditors’ Professional Skeptical Behavior

Auditors need to be professionally skeptical when they are conducting an audit. Skeptical behavior is especially needed when there are indications of fraud in the audited entity. Without skepticism, fraud is likely to be overlooked, because fraud is usually concealed by the perpetrators. This experimental study aimed to investigate the influence of skeptical attitude, tone at the top, and knowledge of fraud on auditors’ professional skeptical behavior. The study participants were junior auditors, senior auditors, and auditor supervisors. The analysis led to three key findings in this study. First, skeptical attitude, tone at the top, and the auditor’s knowledge of fraud influenced the skeptical behavior of professional auditors. Second, a high tone at the top of the partner’s style played an important role in maintaining and improving auditors’ professional skeptical behavior, particularly for auditors who had a weak skeptical attitude. This result supported the theory of the attitudes–behavior relationship described by Fazio (1990) in the MODE model. Third, auditors’ knowledge about fraud improved their professional skeptical behavior. However, knowledge of fraud did not influence auditors’ professional behavior if those auditors had weak skeptical attitudes and were supervised by a supervisor with a low tone at the top style.
 
 Keywords: Tone at The Top, The MODE Model, Professional Skepticism, Knowledge of Fraud
 
 To cite this document: Suzy Noviyanti and Lanita Winata, "The Role of "Tone at The Top" and Knowledge of Fraud on Auditors’ Professional Skeptical Behavior", Contemporary Management Research, Vol.11, No.1, pp.55-74, 2015.
 
 Permanent link to this document:
 http://dx.doi.org/10.7903/cmr.12239

Trust, but verify: fraud in small businesses

Purpose – The purpose of this paper is to raise awareness about internal fraud in small businesses among small business owners, managers, and consultants. Design/methodology/approach – Recent statistics from international fraud surveys are presented, and the theory of why people commit fraud is described. The most common internal fraud schemes as identified in the international fraud surveys are explained, as well as some of the related red flags and preventative measures. Examples of actual internal frauds perpetrated in small businesses are discussed. Findings – This paper summarizes pertinent facts that repeatedly show small businesses are most vulnerable to fraud and suffer a disproportionate median loss when compared to larger businesses. External audits by Certified Public Accountants cannot be relied upon to detect fraud. Owners, managers, and advisors are strongly encouraged to have knowledge of how fraud can affect their organizations in order to prevent or detect fraud and avoid the devastating effect it can have on the small business’s viability. Practical implications – Fraud knowledge can help owners, managers, and advisors prevent small businesses from falling victim to fraud. Originality/value – This paper addresses a critical issue to small businesses, but has so far been largely neglected in the literature. While large financial statement frauds receive widespread publicity, they are relatively uncommon compared to asset misappropriation fraud schemes suffered by small businesses.

The recipient's knowledge of fraud and its impact on the recovery of refunds and credits

(2013). The recipient's knowledge of fraud and its impact on the recovery of refunds and credits. World Journal of VAT/GST Law: Vol. 2, No. 3, pp. 214-223.

Analyzing Financial Fraud Cases Using a Linguistics-Based Text Mining Approach

The paper proposes a linguistics-based text mining approach to automate the process of extracting financial concepts from the Security Exchange Commission (SEC) litigation releases. The text mining application includes data source analyzers that extract concepts such as 'litigation release number', 'release publication dates', 'actions', 'document format type', 'document link', 'short description', 'detailed description', and 'plaintiff'. Furthermore, the application includes analyzers to extract concepts such as manipulation participants, type of manipulation, laws and regulations, and timeline manipulation events and actions from the actual SEC complaint fraud case. In order to extract these concepts, this paper used the financial ontology for fraud purposes introduced by [17] to provide underlying framework for the extraction process and capture financial fraud concepts from the SEC litigation releases.Domain-specificity is incorporated through the development of linguistic resources for financial fraud domain in order to make the analysis more effective. The proposed approach demonstrates the extracted information as a knowledge base to facilitate users’ acquisition, maintenance and access to financial fraud knowledge and improving search results in the SEC enforcement portal. When was this manipulative action performed? Where is the manipulator getting his profit from?Finally, a very important implication of the approach is that it addresses the need to reuse the proposed text-mining in other parts of the domain, and to integrate the extracted information with other financial systems such as market monitoring and surveillance systems, crowd monitoring and fraud knowledge management system.

Mecsek-Gabona: The Final Step of the ECJ’s Doctrine on Reliance on EU Law for Abusive or Fraudulent Ends in the Context of Intra-Community Transactions

The ECJ applied the principle of fraus omnia corrumpit (fraud corrupts everything) in the field of VAT for the first time in 2007. On that occasion, the ECJ decided that knowledge of fraud may have the effect that taxable persons lose the right to deduct input VAT. More recently, the ECJ declared in Mecsek-Gabona that knowledge of fraud may also have the effect that suppliers of goods lose the right to zero rate cross-border transactions. In this article, the author places the ECJ’s decision in Mecsek-Gabona in a broader context.

VAT Fraud in the Customer Chain - The German <I>Perfect Storm</I> Cases

German civil and criminal courts have not always agreed over whether to allow a taxpayer to zero-rate intra-Community supplies when the taxpayer making the supply knew (or should have known) that his buyer in the other Member State intended to fraudulently evade VAT as a missing trader. This is no longer the case. Zero-rating of intra-community supplies is now being denied in German civil and criminal courts. This paper considers how far Germany appears to be extending the law in this area. In 2011 six cases were heard by the Bundesfinanzhof (German Supreme Tax Court) that demonstrate both (a) the civil court’s adoption of criminal analysis and (b) the development of a (should have known) middle ground between actual knowledge and absence of knowledge of fraud in the customer chain. After the December 7, 2010 decision by the Court of Justice of the European Union (CJEU) in Criminal Proceedings against R (“R”), the Bundesfinanzhof made it clear that it would follow the reasoning of the German criminal courts. Civil courts have now denied taxpayers the right to zero-rate dispatches to another Member State, when the taxpayer knew (or should have known) based on objective factors, that its buyer intended to use the transfer to fraudulently evade VAT in the other Member State.The unfortunate outcome may be that a single transaction can be taxed twice: once through the denial of the zero-rate on dispatch, and a second time through an enforcement action in the buyer’s jurisdiction. This is an aggressive approach to combating missing trader fraud. There do not appear to be comparable efforts in other Member States. Two elements of the German cases considered here are noteworthy. First, these are cases that involve fraud in the customer chain rather than the more typical fraud in the supply chain – in other words these cases look forward to fraud in future transactions, rather than backwards at fraud in historical transactions. Secondly, the questions in these six cases involve the denial of a zero rate on an intra-community supply rather than the more common denial of a deduction on a domestic purchase.

A Review and Model of Auditor Judgments in Fraud-Related Planning Tasks

SUMMARYIn this paper, I develop a model that describes auditor and fraud risk factor characteristics that I expect to affect auditor performance in fraud-related planning tasks (i.e., fraud hypothesis generation, risk assessment, and audit program modification). I expect that auditor knowledge, especially fraud knowledge, will significantly affect auditor performance in audit program modification tasks through its effects on fraud risk factor identification and hypothesis generation. Further, due to fraud's rarity, I expect that this knowledge is acquired primarily through indirect experience such as training rather than from direct experience and is enhanced when auditors have better problem solving skills and higher epistemic motivation. This is a significant departure from knowledge acquisition in other audit settings, and there is currently no evidence in the literature examining these relationships. I also propose that the diagnosticity of fraud risk factors and, specifically, the degree to which they support generation of specific testable fraud hypotheses affect auditors' ability to plan effective changes to audit programs. Finally, I review and summarize the extant fraud-related, audit planning literature and identify opportunities for future research.JEL Classifications: M40; M41; M42.

The investigation of credit card fraud in Cyprus: reviewing police “effectiveness”

PurposeThis paper aims to examine the “effectiveness” of the Cyprus police in investigating credit card fraud.Design/methodology/approachIn total, 19 semi‐structured interviews with key criminal justice personnel were undertaken to assess the current capacity of police in investigating credit card fraud.FindingsThe paper discovers that a far more co‐ordinated approach is needed to tackle credit card fraud in Cyprus, with a lack of specialised knowledge of fraud a major concern.Research limitations/implicationsAll interview schedules were sent before the interviews took place and three of the respondents provided written responses only.Originality/valueThis is the first study of its kind that involved primary research interviewing 19 key personnel involved in policing credit card fraud in Cyprus.

A Review and Model of Auditor Judgments in Fraud-Related Planning Tasks

In this paper, I develop a model that describes auditor and fraud risk factor characteristics that I expect to affect auditor performance in fraud-related planning tasks (i.e., fraud hypothesis generation, risk assessment, and audit program modification). I expect that auditor knowledge, especially fraud knowledge, will significantly affect auditor performance in audit program modification tasks through its effects on fraud risk factor identification and hypothesis generation. Further, due to fraud’s rarity, I expect that this knowledge is acquired primarily through indirect experience such as training rather than from direct experience and is enhanced when auditors have better problem solving skills and higher epistemic motivation. This is a significant departure from knowledge acquisition in other audit settings and there is currently no evidence in the literature examining these relationships. I also propose that the diagnosticity of fraud risk factors and specifically, the degree to which they support generation of specific testable fraud hypotheses, affects auditors’ ability to plan effective changes to audit programs. Finally, I review and summarize the extant fraud-related audit planning literature and identify opportunities for future research.