Reports Of Fraud Research Articles

Leveraging Advanced Machine Learning Algorithms for Enhanced Cyberattack Detection on U.S. Business Networks

Cyberattacks' rising volume and sophistication have made conventional security measures, such as firewalls, signature-based intrusion detection systems, and antivirus software, increasingly inadequate. The upsurge of cyber threats has been one of the most pressing predicaments for U.S. organizations in the digital age. With the increased dependence on internet-based forums, cloud computing, and interconnected networks, companies face an advancing number of extreme cyberattacks. The chief objective of this research project is to design and deploy proven machine learning methods to enhance the detection and combating of cyberattacks on U.S. organization networks. This research project retrieved a cyber-attack dataset from Kaggle.com, which had a collection of public datasets of cyber threats. This dataset was curated precisely, offering a realistic representation of cyber-attack scenarios, making it an ideal playground for various analytical tasks. The collection was classified as per the source of the relevant information, such as host-based datasets, network traffic datasets, malware or fraud reports, or a special section for datasets that can be classified according to a specific source. The dataset comprised numerous network traffic attributes such as source and destination IP addresses, ports, protocol, payload size, and attack labels. For this research project, three machine learning algorithms were used, namely: Logistic Regression, XG-Boost and Random Forest. This research project applied performance metrics such as accuracy, precision, recall, and F1 score for the performance of the classification models were considered. The result illustrated that the random forest model was far superior in accuracy compared to the logistic regression model; particularly, it had excellent accuracy. Through the use of advanced machine learning models, organizations will be in a position to devise more dynamic and intelligent security systems that evolve with the threat landscape. These intelligent systems monitor every kind of anomaly, malicious activity, and threat response with unparalleled effectiveness. The findings of this research project have significant implications for enhancing cybersecurity in U.S. organizational networks.

Racial Affirmative Action and the Consensus on Phenotypic Hetero-Identification: Notes on the State Universities of the Brazilian Midwest

Racial affirmative action policies in Brazil have recently reached consensus in their technical procedures for defining black subjects of law, through phenotypic heteroidentification panels. Such panels aim to minimize reports of fraud, legitimize the subjects of affirmative policy law and provide legal security to institutions. This article revisits the construction of this consensus. Before 2012, the landmark Law 12,711, which standardizes affirmative actions in Federal Higher Education Institutions, there was a diversity of understandings and selection procedures. Currently, there is a unified model for these federal institutions and homogeneity regarding the phenotypic heteroidentification procedure. As federal legislation is not imposed on state universities, we highlight similarities and differences between the hegemonic model of phenotypic heteroidentification of federal and state universities in the Midwest. Methodologically, we conducted documentary and bibliographical research on the selection processes of State Universities in the Central-West region, with an emphasis on the different models of phenotypic heteroidentification implemented throughout the 21st century. The results indicate, in many ways, an essentialization of black identity and a depoliticization of the public debate on racial issues in Brazil. We therefore assess that this resulted in a decrease of criticism of the formation of Brazilian national identity and the establishment of objective parameters for the definition of black subjects of law.

Uma via para a legitimidade: o caso das denúncias de fraude na Via Varejo

This teaching case addresses the history of Via Varejo S.A. which received reports of fraud and accounting irregularities at the end of 2019. The company appointed an investigation committee to conduct an independent and detailed analysis which found indications of fraud such as the manipulation of labor provisions, undue delays in writing off assets and accounting for liabilities; and failures in internal controls that could have resulted in material errors in the company’s accounts. The impact was approximately 1.19 billion reais, which fully recognized in their 2019 financial statements and the reexamination of previous periods was not deemed necessary. Considering this uncertain scenario, managers were faced with the following dilemma: how to behave in relation to society considering the findings of fraud? This teaching case is aimed at students in graduate majors in Administration and Accounting who want to study the assumptions of the Legitimacy Theory as well as analyze the actions of this company as strategies designed to maintain or recover its legitimacy.

THE EFFECT OF HEXAGON FRAUD ON FINANCIAL STATEMENT FRAUD (STUDY OF BASIC MATERIAL SECTOR COMPANIES IN 2020-2022)

Fraud cases have increased from year to year and the most detrimental is fraudulent financial statements and causing losses for the company and for user’s financial statements. This research aims to analyze the deep hexagon fraud factors detecting financial statement fraud in Basic Material sector companies registered in Indonesian Stock Exchange (BEI) for the 2020-2022 period. The population used was 93 companies basic materials sector listed on the Indonesian Stock Exchange. Purposive sampling method is the sampling method used in this research. The sample meeting the research criteria are 31 basic material companies with total observations of as many as 93. The data analysis method uses the logistic regression method with the help of an application EViews to carry out data testing. The results of this research are expected to provide better understanding of the factors that influence fraud reports on financial sector Basic Materials Company. Apart from that, the results of this research can also provide insights for companies and regulators in improving internal controls, actions prevention, and detection against financial statement fraud.

Database of Food Fraud Records: Summary of Data from 1980 to 2022

Food fraud prevention and detection remains a challenging problem, despite recent developments in regulatory and auditing requirements. In 2012, the United States Pharmacopeial Convention created a database of food ingredient fraud. The objective of this research was to report on updates made to the database structure and to provide an updated analysis of food fraud records. The restructured database was relational and included four tables: ingredients, adulterants, adulteration records, and references. Four adulteration record types were created to capture the variety of information that can be found in public food fraud reports. Information was searched and extracted from the peer-reviewed scientific literature, media publications, regulatory reports, judicial records, trade association reports, and other public sources covering 1980-present. Over an almost seven-year data entry period, a total of 15,575 records were entered, sourced primarily from the peer-reviewed literature and media reports. The percentage of records that included at least one potentially hazardous adulterant ranged from 34% to 60%, depending on the record type. The ingredients with the highest number of incident and inference records included fluid cow’s milk, extra virgin olive oil, honey, beef, and chili powder. The ingredient groups with the highest number of incident and inference records included Dairy Ingredients, Seafood Products, Meat and Poultry Products, Herbs, Spices, and Seasonings, Milk and Cream, and Alcoholic Beverages. This database was created to serve as a standardized source of information about publicly documented occurrences of food fraud and other information relevant to fraud risk to support food fraud vulnerability assessments, mitigation plans, and food safety plans. These data support the contention that food fraud presents a public health risk that should continue to be addressed by food safety systems worldwide.

Jak oszukują vintedzianki, czyli prawo karne wobec wybranych przejawów przestępczej aktywności użytkowników platformy sprzedażowej Vinted

Vinted is a marketplace which allows its users to buy and sell certain items from and to other people. The online second-hand platform has been operating in Poland since as early as 2013. Being able to conclude online transactions through a popular platform, accounting for the nature of those transactions, provides, despite many advantages, an opportunity for many abuses. There are more and more reports of fraud on the part of Vinted users, both buyers and sellers. What is also surprising, is the creativity and evolution of the methods which the users of this platform follow to commit criminal offences. The criminal activity of Vinted users is a novelty among crimes against property, which means that this subject-matter is yet to be explored at all in criminal legal literature.

Impact of Fraud on Elderly Residents in Washington State

Fraud offenses are a pervasive problem for individuals throughout society, especially for elderly victims. This paper explores the impact of fraud on elderly victims in Washington state both by the number of victims and financial losses. A solution to this problem will assist law enforcement agencies, financial institutions, elder advocacy groups, and the public in understanding the impact and types of fraud utilized successfully against elderly victims. By exploring existing data sources of fraud victims, this study attempts to break down the fraud offenses to understand what types of fraud are being committed and what further research is necessary to fully understand and combat fraud offenses with elderly victims. Understanding the impact of elder fraud is difficult due to the low reporting rates, non-standardized definitions across jurisdictions, and rapidly evolving techniques used by offenders. Prior studies have been published analyzing the national impact of fraud offenses using self-reporting data collection from victims, such as the FBI’s Elder Fraud Report from the Internet Crime Complaint Center. These reports rely on victims to self-report to the agency in question and analyze trends at the national level. This study attempts to use local law enforcement data specific to Washington state to determine the number of victims and their financial losses. Overall, Washington’s elderly residents are one of the highest impacted demographics, making up 18.7% of fraud victims in 2022, with $44.8 million in losses. False pretenses, swindles, and confidence games continue to be the predominant fraud offense type in 2022 for elderly victims in Washington. While these data detail the scope of elderly fraud in Washington, further analysis and research are needed to determine why elderly victims continue to be targets of fraud and why false pretenses, swindles, and confidence games are the most successful types.

Screen-level bureaucrats in the age of algorithms. An ethnographic study of algorithmically supported public service workers in the Netherlands Police

Algorithms are rapidly transforming government bureaucracies. The implications of this transformation for the work of public service employees are not yet well understood. So far, the literature has mostly neglected the use of algorithms by these “screen-level bureaucrats”, and this constitutes a major gap in our knowledge about how algorithms affect bureaucracies. To understand the work of screen-level bureaucrats and to explore how they actively engage with algorithmic software to support their assessment of online fraud, we analyzed 45 hours of observations and 12 in-depth interviews at the Netherlands Police. We employ a socio-material perspective to analyze the dynamics between screen-level bureaucrats and algorithms. We conclude that for administrative tasks, algorithms help screen-level bureaucrats to perform their work by providing structured data and allowing them to focus more on assessments which need a nuanced judgement. At the same time, algorithmic advice in a decision-making task is simply ignored by the screen-level bureaucrats as they predominantly rely on their professional judgement in the assessment of online fraud reports. This highlights the need to further investigate how an algorithm should not only provide accurate advice to the screen-level bureaucrats but also convince them to follow it.

How Worried Are You about Food Fraud? A Preliminary Multi-Country Study among Consumers in Selected Sub-Saharan African Countries.

Food fraud is an old, recurring, and global threat to public health. It poses a serious threat to food security in sub-Saharan Africa (SSA). Despite the prevalence of food fraud in SSA, little is known about how food fraud is viewed by consumers. This study aims to provide an overview of consumers' concerns about food fraud in SSA. A multi-country survey was conducted in October 2022-31 January 2023, and 838 valid responses were returned. To reduce the large and correlated dataset, Principal Component Analysis (PCA) was used. Five components were derived from PCA: (i) Staple foods; (ii) Premium food and drink products; (iii) Trust in reliable sources; (iv) Trust in less reliable sources; and (v) Trust in food vendors. The findings revealed Ghanaian (mean rank = 509.47) and Nigerian (mean rank = 454.82) consumers tended to score higher on the measure of food fraud concern suggesting that they were less confident in the safety and quality of the food they consume. Demographic characteristics including age, number of children, personal and family experience of food fraud and PCA components such as 'Staple foods', 'Trust in reliable sources', and 'Trust in food vendors' significantly predicted the model. This is the first preliminary study to provide empirical findings on consumers' concerns about food fraud in SSA. Practical and policy recommendations for the region are suggested. This includes (i) modelling the AfriFoodinTegrity in West Africa across other major regions such as Central, East, and Southern Africa; (ii) establish a regional sub-Saharan Africa Rapid Alert System for Food and Feed (SSA-RASFF) platform; and (iii) food safety and food fraud reports could be incorporated into SSA-RASFF portal for information sharing.

Analysis the effect of the fraud triangle on fraud report finance use beneish M-Score model

Previous research or relevant research is very important in a research or scientific article. Previous research or relevant research serves to strengthen the theory and phenomena of the relationship or influence between variables . This article reviews the factors that influence financial statement fraud, namely external pressure (pressure), nature of the industry (opportunity) and rationalization (justification), all of which are factors of the fraud triangle, a study of accounting literature using the ability of the beneish m-score. The purpose of writing this article is to build a hypothesis on the influence between variables to be used in further research. The results of this literature review article are: 1) Pressure has an effect on fraudulent financial statements; 2) Opportunities influence fraudulent financial statements; and 3) Justification has an effect on fraudulent financial reporting.
 Keywords: Financial Statement Fraud, Pressure, Opportunity and Justification

PREVENTIVE DETECTION SYSTEM PADA LAPORAN FRAUD MENGGUNAKAN MODEL TIMESERIES PADA KANTOR BEA CUKAI

State revenue from the excise sector has increased every year because cigarette excise is the biggest contributor to state revenue. Fraud or cheating occurs because of motivation and encouragement from various parties. The techniques of fraud are varied, ranging from outsmarting principles to committing illegal acts were then led to the bankruptcy of the company. According to data from the Directorate General of Customs and Excise, which has its head office in Jalan Jenderal A Yani Rawamangun, East Jakarta, fraud was committed by tobacco senders who did not have excise stamps. The problem in this study is how is the preventive detection system on fraud reports at the customs office. The research objective is to obtain preventive detection measures for fraud reports. The results of time series modeling have a score of 1,006 for the training data and a score of 1 for the data testing showing that the prediction results have a high degree of accuracy.

Peculiarities of the investigation of frauds disguised as civil legal relations

The materials of judicial and investigative practice were analyzed, as a result of which shortcomings in the process of proof have been identified, to eliminate which it is appropriate to distinguish three stages in the fraud investigation methodology: 1) features of receiving and checking fraud reports and working with the victim; 2) collecting evidence of the use of deception or abuse of trust by a specific person before his or her detention; 3) collection of evidence after arrest and notification of suspicion to a person involved in committing fraud. It has been noted that each of the stages is characterized by a feature in relation to tactical tasks and means of solving them and is acceptable and understandable to employees of practical units, as it is related to specific procedural features of their work.
 It has been determined that the peculiarities of the stage of receiving and checking fraud reports and the procedure of the investigator’s work with the victim are the need to record the initiative of the victim (in person or through a representative) to prosecute the guilty person and demand compensation for the damage caused. A set of actions aimed at solving typical tactical tasks solved at this stage has been presented.
 It has been noted that the courts recognize as a legal basis for the detention of a person suspected of committing fraud, only collected evidence of the use of deception or abuse of trust during the acquisition of property or the right to it. Therefore, at the stage of collecting evidence of involvement in fraud of a specific person before his or her arrest, the investigator must solve quite specific tactical tasks, taking into account this, it has been recommended to carry out a set of measures and procedural actions.
 The specifics of evidence collection after the arrest and notification of suspicion to a person involved in fraud were revealed through the implementation of a complex of investigative actions (presentation for identification; interrogations, obtaining temporary access to things and documents, etc.).
 The need to simplify the procedure of proof in proceedings on simple, minor criminal offenses related to fraud and more active use of the institution of concluding agreements provided for in Art. 468 of the CCP of Ukraine.

Effect of Directors' Bonus Compensation, Institutional Ownership and Size of The Board of Directors on Profit Management

The current business development is very fast, which encourages organizations to be able to continue to present reliable and accountable financial information for their users. Reliable financial information is very necessary for decision-makers, especially stakeholders and potential investors, especially to make investments. Unqualified and reliable financial statements produce Earning Management and Financial Fraud Reporting. Research design is a blueprint, that is, a design for collecting, measuring, and analyzing data, which is designed to answer the formulation of problems. This study used a descriptive research design. This research is research with a quantitative approach. The purpose of this study is to analyze the influence between exogenous variables to endogenous variables, so this study is a type of Causal research. The type of quantitative research in this study is causal studies, which is a type of research based on the concept of cause. The conclusion of the results of this study is that CEO bonus compensation and the size of the board of directors have a positive effect on earnings management.

Mapping of Whistleblowing and Fraud Reporting Research: A Forty-Year Bibliometric Analysis

This research aims to identify influential cited works in whistleblowing and fraud reporting studies and to provide thematic insights and consequences for accounting and management academics interested in conducting whistleblowing research and for practitioners in increasing corporate accountability. This paper presents a bibliometric analysis (frequency analysis, citation metrics, and data visualization) from the Scopus database for 1982–2022. The author examined 12,791 citations of 200 whistleblowing-related articles using citation and co-citation analyses. The most frequent keyword has a total link strength of 1,683, with a strong link to "whistleblowing system," "accounting and fraud," and "company." A total of 285 scholars with 44 publishers in 7 countries published several whistleblowing and fraud reporting studies in different languages. The highest-ranking publisher was Springer Netherlands, with 57 publications and 4,295 citations. J.P Keenan from the Institute for Leadership and Global Education, United States is the most prolific whistleblowing writer. The author also used network visualization analysis tools to profile the centrality features of these articles' keyword clusters. Positive and negative antecedents that predict whistleblowing and fraud reporting intention were also summarized. There has never been a comprehensive review of the Scopus scientific database's whistleblower and fraud reporting publications. Keywords: bibliometric analysis, data visualization, whistleblowing, fraud reporting. DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.60.11

Correlates of responding to and becoming victimized by fraud: Examining risk factors by scam type

AbstractConsumer fraud reports in North America have been increasing each year along with median fraud losses. Using survey data from 1375 American and Canadian consumers who previously reported a scam to a North American consumer complaint organization, this study examines the correlates of responding to and losing money to four categories of consumer fraud: opportunity‐based scams, threat‐based scams, consumer purchase scams, and phishing scams. Relative to opportunity‐based scams that offer the promise of rewards, consumers were less likely to respond to and report losing money when solicited by threat‐based scams and phishing scams. The odds of victimization were highest for consumer purchase scams. Risk factors, including gender, race, education, income, loneliness, financial fragility, and financial literacy, differed across scam categories, suggesting that victim profiles differ across fraud types. Some of the risk factors associated with responding to the scam solicitation (vs. ignoring it outright) were different from risk factors associated with victimization. Having advance knowledge of fraud prior to being exposed was protective across nearly all scam types. Results suggest that awareness about specific scams helps protect against financial loss. Additional research is needed on how to effectively deliver fraud awareness messages to those who are most susceptible.

The 11 sins of seafood: Assessing a decade of food fraud reports in the global supply chain.

Due to complex, valuable, and often extremely opaque supply chains, seafood is a commodity that has experienced a high prevalence of food fraud throughout the entirety of its logistics network. Fraud detection and prevention require an in-depth understanding of food supply chains and their vulnerabilities and risks so that food business operators, regulators, and other stakeholders can implement practical countermeasures. An analysis of historical criminality within a sector, product, or country is an important component and has not yet been conducted for the seafood sector. This study examines reported seafood fraud incidents from the European Union's Rapid Alert System for Food and Feed, Decernis's Food Fraud Database, HorizonScan, and LexisNexis databases between January 01, 2010 and December 31, 2020. Illegal or unauthorized veterinary residues were found to be the most significant issue of concern, with most reports originating from farmed seafood in Vietnam, China, and India. For internationally traded goods, border inspections revealed a significant frequency of reports with fraudulent or insufficient documentation, indicating that deceptive practices are picked up at import or export but are occurring further down the supply chain. Practices such as species adulteration (excluding veterinary residues), species substitution, fishery substitution, catch method fraud, and illegal, unreported, and unregulated fishing were less prevalent in the databases than evidenced in the scientific literature. The analysis demonstrates significant differences in outcomes depending on source and underlines a requirement for a standardized and rigorous dataset through which food fraud can be scrutinized to ensure enforcement, as well as industry and research resources are directed accurately. Practical Application: Levels of historic food fraud in a product, sector, supply chain node or geographic location provide an indication of historic criminality, the methods used and the location of reported frauds. This study provides an overview of historic levels of seafood fraud that can be used to inform seafood fraud prevention and mitigation activities by the food industry, regulators and other stakeholders.

Exploring Fear of Crime for Those Targeted by Romance Fraud

ABSTRACT This article assesses 3,259 romance fraud reports made by individuals to Scamwatch (Australian online reporting portal for fraud), between July 2018 – July 2019 (inclusive). It seeks to highlight experiences of fear of crime as articulated by the complainants. Drawing on frameworks used to analyze fear of crime (specifically the affective, behavioral and cognitive aspects of fear) the article is an exploratory assessment of how fear of crime is evident in those targeted by romance fraud. It builds a model for better understanding differing victim responses to romance fraud and the often-hidden harms involved around the anxieties of victims which importantly, can manifest in both online and offline environments.

Risk/Reward Financial Decision Making in Older Adults with Mood Disorders: Insights from the Iowa Gambling Task

<h3>Introduction</h3> There is increasing clinical and legal interest in the decision-making abilities of older adults given the potentially far-reaching consequences, particularly with respect to financial well-being. For example, the Federal Bureau of Investigation's most recent elder fraud report showed that 105,301 individuals over the age of 60 fell victim to fraud in 2020, resulting in total losses of nearly $1 billion. This highlights the importance of investigating potential factors associated with changes in risk/reward financial decision-making in older adults. The reasons behind age-related changes in financial decision-making are still poorly understood, though several factors have been proposed, such as age-related affective changes (Kensinger & Leclerc, 2009). In addition, late-life mood disorders, such as major depression and bipolar disorder, may further alter or compromise financial decision-making (Fein et al., 2007). These findings have been inconsistent, however, and this remains an understudied area. Accordingly, the aims of this study were twofold: (1) To investigate risk/reward financial decision-making in older adults with and without mood disorders using a well-validated paradigm, the Iowa Gambling Task (IGT), and (2) To determine whether the relationship between group and IGT performance varied as a function of positive or negative affective state, as measured by the Positive and Negative Affect Scale (PANAS). <h3>Methods</h3> Forty-five older adults ranging in age from 55 to 86 (<i>M</i>=68.07 ± 8.14) were selected from the Geriatric Mood Disorders Database (GMDD) Study at McLean Hospital (19 healthy control, 26 mood disorder). The mood disorder group included patients with bipolar disorder (<i>n</i>=13) or major depressive disorder (<i>n</i>=14). For aim 1, a Group (control vs mood) by Trial Block (1-5) repeated measures ANOVA was performed using IGT net score as the outcome variable. Independent samples t-tests were then used to assess group differences in overall deck preference (i.e., risky vs conservative decks) and sensitivity to punishment frequency. For aim 2, linear regression was performed using Group, PANAS scores, and Group x PANAS interaction terms as predictors of IGT performance. <h3>Results</h3> Groups did not differ in age, education (∼16 years in both groups), or global cognitive ability (MMSE). The mood group endorsed more negative affectivity on the PANAS [<i>p</i> = .001], whereas groups did not differ in positive affectivity. Repeated measures ANOVA showed a marginally significant main effect of Trial Block [<i>F</i>(1,4) = 2.40, <i>p</i> = 0.07], reflecting a general trend toward more conservative or advantageous choices over time. However, this trend did not vary by Group [<i>p</i> = 0.22]. The groups also did not differ in deck preference [all <i>p</i>s > .19] or sensitivity to punishment frequency [<i>p</i> = 0.58]. Regression analysis revealed a marginally significant Group x PANAS-Neg interaction in Trial Block 1 Net Score [<i>β</i> = -3.90, <i>t</i>(43) = -1.95, <i>p</i> = 0.059], which reflected a significant positive correlation between negative affectivity and more conservative or advantageous decision making on early trials in healthy controls only [Spearman's ρ = 0.56, <i>p</i> = 0.13]. A marginally significant Group x PANAS-Pos interaction was also found for Deck A preference – i.e., one of the risky decks [<i>β</i> = 0.54, <i>t</i>(43) = 1.89, <i>p</i> = 0.067]. This reflected a positive correlation between Deck A choices and positive affectivity in the mood group, but the opposite in the control group, though neither correlation was significant [<i>p</i>s > .10]. There were no Group x PANAS interactions in sensitivity to punishment frequency. <h3>Conclusions</h3> This study showed no differences between healthy older adults and those with mood disorders in IGT performance, with both groups exhibiting a trend toward more advantageous (i.e., less risky) choices over time. This suggests the presence of a mood disorder in later life may not compromise one's ability to integrate feedback and improve risk/reward decision-making over time in a financial context. However, this conclusion should be interpreted cautiously given the somewhat modest sample size and generally high education level in both groups, with the latter potentially being protective in some way. With those same caveats in mind, interesting trend-level group interactions were also seen when the affective state was considered, suggesting a potential differential impact of positive and negative affectivity on decision-making style across groups. The possible effects of affective valence on risky decision-making in older adults should be investigated in larger and more diverse samples to help clarify the reliability and generalizability of the current findings.

Too Scared to Shop: the Role of Apatephobia, Trust, Risk, and Suspicion in Market Exchanges

According to the U.S. Federal Trade Commission, in 2018 there were over 1.4 million reports of fraud resulting in an estimated loss to consumers of $1.48 billion (Federal Trade Commission, 2019). A natural reaction to the prevalence of fraudulent transactions is apatephobia, or a fear of intentional deception leading to less desirable outcomes in a market exchange. The current paper relates apatephobia to the literature on trust, risk, suspicion, defensive processing, emotions, and counterfactual thinking and offers 15 propositions related to these constructs. Further, a nomological network is proposed which relates these constructs together, identifies the conditions under which apatephobia will result in a consumer declining to engage in an exchange, and the feedback mechanism by which being deceived strengthens the motivation to avoid any future reoccurrence. Little academic attention has been paid to a fear of being deceived, thus I expect the current work to be of interest to researchers in the area of trust, risk, and deception.

Fraud Reporting within an Organization and the Use of the Internal Audit Function as a Training Ground for Management

ABSTRACTThis study examines the effects of using the internal audit function as a management training ground (MTG) and fraud magnitude on internal fraud reporting decisions. Two experiments examine (1) internal auditors' reporting behaviors, and (2) other employees' willingness to report directly to internal audit. In the first experiment, experienced internal auditors indicate that the use of internal audit as a MTG may negatively impact fraud reporting likelihood by internal auditors to the Chief Audit Executive (CAE). Further, using the internal audit function as a MTG inhibits the sense of urgency internal auditors feel to report large fraudulent acts. The second experiment compares management accountants' preferences for reporting to an anonymous third-party hotline versus reporting directly to internal audit. The results indicate a preference for the hotline that increases with a MTG. This preference is fully mediated by the perceived trustworthiness of internal audit, which is negatively impacted by a MTG.Data Availability: Contact the authors.