Fraud Triangle Research Articles

The Development of Financial Statement Fraud Research: A Bibliometric Analysis

This research aims to present and explain the development of research related to financial statement fraud by reviewing bibliometric analysis taken from the Scopus database for the period 1979 – 2023. The method used is a bibliometric analysis approach using VOSviewer and Microsoft Excel to analyze data frequency. The results of this research show that the research topic of financial statement fraud will be most researched in 2023 with 60 articles, the journal that publishes the most topics related to financial statement fraud is the Journal of Financial Crime. The country that publishes the most on the topic of financial statement fraud is the United States. Variables that often appear related to the topic of financial statement fraud are corporate governance, earnings management, crime, and the fraud triangle. Brazel, Hermanson, and Jones are the authors who write most frequently or extensively about financial statement fraud.

Improving fraud detection with semi-supervised topic modeling and keyword integration.

Fraud detection through auditors' manual review of accounting and financial records has traditionally relied on human experience and intuition. However, replicating this task using technological tools has represented a challenge for information security researchers. Natural language processing techniques, such as topic modeling, have been explored to extract information and categorize large sets of documents. Topic modeling, such as latent Dirichlet allocation (LDA) or non-negative matrix factorization (NMF), has recently gained popularity for discovering thematic structures in text collections. However, unsupervised topic modeling may not always produce the best results for specific tasks, such as fraud detection. Therefore, in the present work, we propose to use semi-supervised topic modeling, which allows the incorporation of specific knowledge of the study domain through the use of keywords to learn latent topics related to fraud. By leveraging relevant keywords, our proposed approach aims to identify patterns related to the vertices of the fraud triangle theory, providing more consistent and interpretable results for fraud detection. The model's performance was evaluated by training with several datasets and testing it with another one that did not intervene in its training. The results showed efficient performance averages with a 7% increase in performance compared to a previous job. Overall, the study emphasizes the importance of deepening the analysis of fraud behaviors and proposing strategies to identify them proactively.

Fraud Triangle, Integritas, dan Penggunaan Teknologi Informasi terhadap Kecurangan Akademik Masa Pandemi Covid-19

The aim of this research is to analyze how the fraud triangle, student integrity, and the use of information technology influence academic cheating behavior among students during the Covid-19 pandemic. This research was conducted at the Faculty of Economics and Business, Udayana University, with a total sample of 280 active accounting students selected using a purposive sampling approach and analyzed using multiple linear regression analysis. Empirical results found that the fraud triangle and the use of information technology have a positive influence on academic cheating behavior, which means that when pressure, opportunity, rationalization, and use of information technology increase, cheating activities will also increase. Student integrity, on the other hand, has a negative influence on academic cheating behavior.

The Independence of Supreme Audit Institution in Mitigation Financial Fraud in Nigeria

The subject of enquiry is to ascertain the independence of Supreme Audit Institutions in mitigating financial fraud in Nigeria. Regular audits of public financial account are entrusted in the Office of the Auditor-General in Nigeria. In addition, the increase in wastages and ineffective governance by agencies of the public sector has brought enormous pressure on the supreme audit institutions. However, numerous challenges weakened the independence of Supreme Audit Institution (SAIs) to have effective performance in Nigeria. This includes insufficient funding, lack of knowledge and experience, the required enabling environment, adherence to international standards, appointment and promotion of Supreme Audit Institution (SAI) heads/leadership, among others. The argument of this study is anchored on the assumption that the process of appointing staff of the Supreme Audit Institution (SAI), deliberate under-funding of the institution and quality of external auditors hired can impair SAIs from carrying out their statutory duties effectively to achieve their set mandate. The study therefore is supported by agency theory and fraud triangle theory. Primary data source wasused as data for analysis. A survey approach was used, through the administration of questionnaires to the staff in the Office of the Auditor-General, Ministries, Agencies and Boards in the Ondo State Government. A population of (200) respondents were sampled. Data analysis approach used for the test of each null hypothesis was Chi Square (X2). The results showed that since Nigeria's democracy began in 1999 and has persisted unabatedly, public officers have engaged in a number of corrupt practices, for which SAIs have not done a creditable job of increasing public accountability. The study comes to the conclusion that the inability of SAIs in Nigeria to carry out their deterrent and prevention functions is the reason why corrupt practices among public officials continue to occur. To enable them to serve as public officers' watchdogs, SAIs in Nigeria should have more financial, political, administrative, and organizational autonomy.

Peran Internal Auditor Untuk Mencegah Terjadinya Fraud Di Dalam Perusahaan

This article aims to determine the role of internal auditors in preventing conditions or fraud in companies. Acts of circumstances can occur due to opportunity, pressure and rationalization, as mentioned in the fraud triangle. One of the reasons why perpetrators of conditional acts can freely carry out conditional acts is if there is no proper supervision, so that the opportunity to carry out conditional acts comes. Therefore, the role of independent internal auditors in companies is very necessary to suppress opportunities that will be taken by potential perpetrators.

The fraud triangle: factors causing fraud in government financial reports

Fraud Terms in financial reports, it is an action or deed that can cause reporting errors in financial reports, where this action is an action carried out intentionally to gain personal benefit from the resources available in the company or certain field that is being undertaken. This action is often carried out by a person or management by manipulating financial reports or in Indonesia is often referred to as corruption. The aim of this research is to conduct a literature review regarding the factors that cause fraud in the preparation of financial reports. In examining these financial reports, the auditor is tasked with and is expected to be able to detect fraud before concluding whether a financial report is reasonable or unreasonable. There are several factors that can cause fraud based on literature studies that have been carried out by researchers, namely due to pressure, opportunities, and factors of rationalization or self-justification. This research was carried out using the literature study method or literature review of previous research related to the problem being researched, namely fraud. The results of the research obtained show that several factors that cause fraud in financial reports are mostly due to pressure, opportunity and individual factors.

Determinants of Goods/Services Procurement Fraud with Performance Accountability as Moderation in Central Lombok Regency Government

The purpose of this study is to examine the effects of competence and opportunity, as well as organizational commitment to PBJ fraud, directly or with performance accountability as a moderation variable. The study was conducted on a sample of goods and services procurement actors in Central Lombok Regency, with as many as 120 respondents. Data analysis was done using SmartPLS. The results showed the correlation of variables in Goods/Services Procurement Fraud (PBJ) with the principles of agency theory and the fraud triangle. The competence of PBJ implementers has a negative influence on PBJ fraud, in line with agency theory, which emphasizes the importance of highly competent individuals in reducing opportunities for unethical behavior in public agencies. Strong organizational commitment also shows a negative influence on PBJ fraud, confirming agency principles that emphasize adherence to procurement processes. On the other hand, the finding that opportunity has a positive effect on PBJ fraud is in line with the fraud triangle theory, which highlights that opportunity in the procurement system can facilitate fraudulent practices. The role of performance accountability that strengthens the influence of competence and commitment to PBJ fraud is in line with the fraud triangle theory, affirming the importance of accountability in controlling fraud opportunities. These findings consistently support the principles of agency theory and the fraud triangle in the context of the procurement of goods and services in the public sector.

Mendeteksi Faktor-faktor Pressure Terhadap Kecurangan Laporan Keuangan Menggunakan Artificial Neural Network

Fraudulent financial statements are the result of misstatements resulting from intentional acts or omissions, which could materially mislead readers of the financial statements. The focus in this research is to determine the most important pressure factors in detecting fraudulent financial statements. Pressure is one of the fraud risk factors in the fraud triangle. Pressure is a condition felt by management due to incentives to commit fraud, consisting of: financial stability by proxy (GPM, ACHANGE, SCHANGE, CATA, SALAR, SALTA, INVSAL), external pressure (LEV, FINANCE, FREEC), personal financial need (OSHIP), and financial target (ROA). Data collection method using secondary data on the manufacturing sector firms that are publicly listed on the Indonesia Stock Exchange in 2017-2021. The research method used is quantitative and the sampling method uses a purposive sampling technique, obtained 137 sample companies with 685 total data observed. Data were analyzed using an Artificial Neural Network. The findings indicated that the gross profit margin (GPM), cash flow from operating to total assets (CATA), demand for financing (FINANCE), leverage (LEV) and return on total assets (ROA) is the most important proxy in detecting fraudulent financial statement, while other proxies are not too important in detecting fraudulent financial statements.

The Fraud Triangle and Private Foundations: How Current Regulation Perpetuates Fraud

The Fraud Triangle and Private Foundations: How Current Regulation Perpetuates Fraud

The dynamic role of the Internet of Things (IoT) on the excel performance of Islamic banks in United Arab Emirates

The rapid advancement of technology has substantially impacted numerous sectors, including the banking industry. It is now apparent that the banking industry is affected by the innovative role that the Internet of Things (IoT) plays, which affects a multitude of operations and services. This study uses a quantitative approach and PLS-SEM to investigate the widespread impact of Internet of Things (IoT) technology on the Excel Performance of Islamic Banks in the UAE. The study integrates the Resource-Based View (RBV), Islamic Banking Theories, and Fraud Triangle Theory to create a complete framework. The research's reliability is supported by a sample of 407 replies from 504 participants. The findings strongly support the hypotheses that IoT integration improves Islamic banking performance in the UAE, such as data analytics, customer service, automation systems, fraud detection capabilities, and asset-backed finance, while aligning with Sharia Principles and improving risk-sharing mechanisms. However, the influence of IoT on escalating fraudulent activities and hence negatively impacting performance was not proven. The study emphasizes the importance of IoT in improving operational efficiency and customer satisfaction in Islamic banks in the UAE.

INDONESIA'S BANKING EXCELLENCE IN THE EYES OF CROWE'S FRAUD PENTAGON

Complex factors trigger fraud. The basic theory is the fraud triangle theory. Crowe (2011) developed the idea into a pentagon theory and found two other factors: arrogance and competence. This study aims to analyze each element of Crowe's Fraud pentagon theory to detect fraudulent financial statements. Various proxies were used: pressure (financial targets and stability; external pressure; institutional ownership), opportunity (number of audit committees and nature of the industry), rationalization (change in auditors and auditor opinion), competence (change in directors and ineffective monitoring), arrogance (picture of the number of CEOs). Seventy-six banking companies listed on the IDX from 2013 to 2017 became sample. A multiple regression model is used as technique analysis. The results showed that pressure, rationalization, and competence affected financial statement fraud (FSF). This influence is in a good tone. This research contributes to the development of the Crowe's Fraud pentagon and Indonesian banking governance.

Unveiling the Motivation of Fraudulent Financial Statement in ENVY: Fraud Triangle Theory

This study aims to unravel the motivations behind the production of fraudulent financial statements by PT. Envy Technologies Indonesia Tbk. It employs a case study approach and the fraud triangle theory to shed light on this critical issue. This research is of paramount importance because fraudulent financial statements can have severe repercussions, adversely affecting shareholders and the broader capital markets. The primary findings of this investigation indicate that three key factors played a significant role in encouraging fraud within PT. Envy Technologies Indonesia Tbk. These factors are pressure, opportunity, and rationalization. The impetus for such fraudulent actions is traced back to the pressure exerted on maintaining high stock prices. The opportunities for manipulation arise from a deficiency in internal oversight mechanisms, enabling misconduct. Furthermore, rationalizations are formulated to justify the diversion of IPO funds in a manner that aligns with the information disclosed in the prospectus. This research offers a nuanced understanding of the factors that drive financial statement fraud in Indonesian public companies. It highlights that fraudulent activities are often the result of a combination of pressures, opportunities, and rationalizations. Recognizing these factors can be instrumental in implementing preventive measures to mitigate the occurrence of such fraud in the future.

The moderate role of national culture and prosperity index on the effectiveness of the fraud triangle to prevent financial statement fraud: a cross-country meta-analysis approach

The moderate role of national culture and prosperity index on the effectiveness of the fraud triangle to prevent financial statement fraud: a cross-country meta-analysis approach

The moderate role of national culture and prosperity index on the effectiveness of the fraud triangle to prevent financial statement fraud: a cross-country meta-analysis approach

The moderate role of national culture and prosperity index on the effectiveness of the fraud triangle to prevent financial statement fraud: a cross-country meta-analysis approach

Identifikacija i sprečavanje prevarnog finansijskog izveštavanja

Effective detection of fraudulent (false) financial reporting requires an integrative conceptual framework. This paper presents a general framework for studying factors related to the causes of fraudulent financial reporting. The purpose is to sharpen our thinking on conducting research modalities for defining a framework for effective risk management of fraudulent financial reporting and to assist scholars, professional accountants, regulators, and policymakers to better understand the drivers of fraudulent financial reporting and the context in which it occurs. We examine the characteristics of companies engaged in fraudulent financial reporting, as identified in the literature, through research related to the fraud triangle, and ethical aspects. We also address the impact of professional and legal regulations on the area of effective fraud risk management. Finally, we summarize previous findings and present conclusions and suggestions for areas requiring further research.

Faktor-Faktor Yang Mempengaruhi Korupsi Berdasarkan Teori Fraud Triangle Pada Novel 86 Karya Okky Madasari

This research aims to determine the factors that cause corruption using the fraud triangle theory in literary media. The literary work that will be used as a source of research data is the novel entitled "86" by Okky Madasari. The problem that will be presented is about what factors influence the occurrence of corruption using the fraud triangle theory in the novel "86". This research is a type of qualitative research using the hermeneutic method or interpreting the meaning of the text. The conclusions obtained from this research are the results of the analysis carried out on the novel "86" by Okky Madasari, which shows the factors that cause acts of corruption, namely pressure, opportunity and justification.

The Fraud Triangel Approach: Detecting Fraudulent Behavior in Business Finance in Sidoarjo

Fraud that occurs in MSME players today is increasingly diverse. Fraud can take the form of financial statement fraud, mixing personal finances with business finances or dishonesty in running a business. This causes a prolonged dilemma for MSME actors in managing business income. Many MSMEs have not been able to manage good financial reports. This Research Objective is used to gain a deeper understanding of the behavior and detection of fraud that occurs in Micro, Small and Medium Enterprises (MSMEs) based on the Fraud Triangle Theory and the efforts made by MSMEs in preventing and detecting fraud early. The type of sample experiment research used is the random method. The method of collecting information through direct observation and questions, FGDs and the technique of using documentation in the data collection process. The data analysis approach involves the steps of data reduction, data presentation and data verification. The results of the analysis explain that MSME actors do not all carry out financial statement management and still carry out a lot of fraud. The implications of this research contribute to the understanding of fraud, especially by forensic accountants, auditors, fraud examiners and anti-fraud examiners who are used to see fraud in MSMEs. Highlights : Fraud in MSMEs is multifaceted, encompassing financial statement manipulation and unethical business practices. Research aims to understand fraud behavior using the Fraud Triangle Theory and explore MSME efforts in fraud prevention. Utilizes random sampling and data collection methods like direct observation, FGDs, and documentation to gather comprehensive insights. Keywords : Fraud Triangel, Financial Statements, Fraudulent Behavior and MSMEs

The effect of pressure, opportunity, and rationalisation on asset misappropriation in public organisations: Evidence from emerging markets

This study aims to analyse the factors affecting asset misappropriation from the Fraud Triangle Theory perspective: pressure, opportunity, and rationalisation. Pressure, the first facet, is dissected into financial and non-financial strains, including the taxing burden of work. To represent opportunity and rationalisation, proxies are utilized-weak internal control mirrors opportunity, while poor organizational culture encapsulates rationalisation. Employees who were chosen as samples are employees with a position or authority to carry out certain tasks. A questionnaire was distributed to 400 respondents, and only 206 questionnaires were returned and processed for analyses in this study. The results of this study indicate that organisational culture significantly influences asset misappropriation incidences in Malaysian public organisations. However, financial pressure, work pressure, and internal control factors do not significantly affect the misappropriation of assets. This study underscores the importance of mitigating asset misappropriation by focusing on curbing employees' negative rationalization. Strengthening internal control measures and ensuring equitable task assignments emerge as crucial strategies. The outcomes contribute to the limited discourse on asset misappropriation, especially in the context of government agencies in emerging markets. As organizations strive to foster a secure environment, addressing cultural aspects and refining internal controls emerge as pivotal avenues for minimizing asset misappropriation risks.

Upaya Pencegahan White Collar Crime

White collar crime is increasingly prevalent in various corporate sectors and causes significant financial losses and damage to public trust. This type of crime includes embezzlement of funds, manipulation of financial statements, bribery, insider trading in the capital market, and theft of customer personal data. Although it occurs a lot, the prevention of white collar crime is still not optimal and the perpetrators are rarely prosecuted properly. This paper aims to analyze the various determinants that influence the occurrence of white collar crime in order to formulate policy recommendations and prevention strategies in the future. A systematic approach is used by applying the fraud triangle theory which focuses on the three main elements that cause fraud, namely pressure, opportunity and rationalization. The results of the study show that pressure to meet high performance targets and large bonuses often encourage individuals to commit fraud. Meanwhile, weak supervision and lack of transparency create opportunities for fraud. Perpetrators also often justify their actions, for example by assuming that they will not be caught or the value of the loss is small. The complexity of modern corporate operations also increases opportunities for white-collar crime. Effective prevention efforts must be comprehensive by involving various parties and strengthening a number of aspects as controls. The role of internal and external supervisors (auditors) of companies needs to be continuously improved, supported by modem fraud detection technology tools. Whistleblowing mechanisms need to be strengthened in every company and kept confidential to encourage early reporting of fraud indications.

The Awakening of Post-Fraud Enthusiasm

Trust is the basis of a person’s reciprocal relationship. Entrusting the management of a business to another party requires strong conviction and a clear agreement between the two parties because it is very vulnerable to fraudulent actions with various motives. This study uses a qualitative phenomenological approach that occurs, in the form of fraudulent acts with abuse of power, by analyzing the fraud triangle. Fraud behavior can be based on trust in the perpetrators of fraud which is used as an opportunity to commit fraud because there is no suspicion and even no control is carried out. The arrogance factor also encourages perpetrator to abuse the trust he has. Even the perpetrator of fraud confidently reports the business owners with allegations of embezzlement of funds as a form of self-defense for the fraud he has committed. This situation forces the business owners to change the director, strengthen internal control systems, and integrate simple technology as an effort to restore business and minimize fraud in the future