Fraud Indicators Research Articles

Transparency of commitment making officials (PPK) in the Implementation of auctions of goods and services in the health sector in South Sulawesi Province

Transparency in the management of auctions for the construction of hospitals and medical devices is important, there are still many indications of fraud committed by irresponsible persons making the auction process unaccountable, therefore the purpose of this research is to see the transparency of the implementation of the duties of the commitment makers (PPK) in the implementation of Goods and Services Auction in South Sulawesi Province, especially in the health sector. Data collection techniques used in the form of interviews, literature study, observation, and documentation, data analysis consists of data collection, data reduction, data presentation and drawing conclusions. The results showed that the implementation of the duties of the Commitment Making Officer (PPK) in the auction of goods and services in the health sector in South Sulawesi Province was not optimal, because even though information on each stage of the auction process was available on the LPSE website, the availability and accessibility of documents for evaluation was still a formality, it was still weak.

Explain the Dimensions of the Concept, Instances and Indications of Fraud in Financial Statements: Based on the Method Thematic Analysis

Explain the Dimensions of the Concept, Instances and Indications of Fraud in Financial Statements: Based on the Method Thematic Analysis

Does Bank Governance Reduce Financial Statement Fraud? The Moderating Role of Operational Risk

The complexity generally triggers the opportunity of fraud in operation experienced, so that it can potentially be a serious threat which has a significant loss impact for the company. This study focuses on the indications of financial statement fraud committed by commercial banks in Indonesia. The purpose of this study is to examine whether the implementation of good corporate governance can reduce fraudulent financial statements activity in banks, using the moderating role of operational risk. The population determined is all commercial banks listed on the IDX for 2016 to 2020. All 25 banks that met the specified criteria were used as research samples. The data analysis technique used the Moderated Regression Analysis (MRA) method analyzed with SPSS Software. The research findings reveal no significant relationship between Bank governance and financial statement fraud directly. However, operational risk is shown to have a moderating role in the relationship between Bank governance and financial statement fraud. In addition, operational risk also has a function as a predictor concerning fraud. Overall findings of this study are exciting because the interaction between corporate governance and operational risk can influence the company's decisions on the possibility of fraudulent financial statement activities. The benefits of this research are expected to provide input for bank management in assessing the level of corporate governance implementation and response plans for financial statement fraud actions that have a significant impact on high operational risk costs. In addition, it can provide information for regulators in supervising and evaluating regulations related to anti-fraud strategies set in commercial banks and for investors to ensure the security of their investments to increase investor confidence in banks. Finally, it suggested that further research reconsider the concept and size of the study and add new concepts to provide more determinant factors that affect fraudulent financial statements in companies.

The role of the audit committee and employee well-being in controlling employee fraud

Fraud is still a problem in the banking industry. Association of Certified Fraud Examiners (ACFE) reported that banks experienced the highest number of fraud cases compared to other types of businesses. This study aimed to demonstrate the effect of the audit committee’s size, gender, expertise, independence, and employee well-being on employee fraud. The study on fraud uses questionnaire data to identify employee fraud (Fathi, Ghani, Said, & Puspitasari, 2017; Nawawi & Salin, 2018). We complement the previous study by using the number of cases as an indicator of employee fraud. Using a sample of 14 Islamic banks, we find that audit committee members’ accounting expertise and employee well-being can influence employees’ willingness to commit fraud. After overcoming the problem of endogeneity and robustness tests, the results of our study were consistent. The number of audit committee members, gender, and independence have not impacted fraud control. The expertise of the audit committee and employee well-being can be an effective internal control system in reducing fraud. This study adds to previous studies that have explained fraud by using employee perceptions and financial ratio indicators to detect director fraud. This study uses the number of employee fraud cases reported by the bank.

The Fraud theories: Triangle, Diamond, Pentagon

Early indications of fraud play an important role in detection and prevention. Murphy and Dacin (2011) state frauds mostly occur in three ways: error - lacking awareness, intuition supporting fraud - avoiding negative emotions or effects, and, awareness of fraud coupled with cost-benefit analysis. Hutchison (2013) comparing management fraud to human behaviour says fraud is intentional, multidimensional, and complex - the fallout of several interactive factors, analysis fraud through different abstracts - organisational systems, conflicts of interest, rational choice, social constructiveness, psychodynamic and developmental outlook. The proposed unrealistic goals rewarding attractive compensations purport indulgence in fraud. The desire for achievements, fear of losing the job, challenges meeting financial targets for bonuses, unhealthy competition and criminal collaborations are causes of financial fraud. Management fraud results from decision-making, influenced by personality traits, beliefs, attitudes, social customs, institutional rules and regulations, ethical values, and organisational culture. The paper aims to understand fraud and the theories related to fraud.

The EU self-surplus puzzle: an indication of VAT fraud?

The world runs a trade surplus with itself: the reported values of exports exceed the reported values of imports. This is logically impossible but a well-known empirical fact. Less well-known is the fact that, in recent years, the EU has a trade surplus with itself that amounts to more than 80% of the global surplus. In this paper, we show that this EU self-surplus is worth a striking 307 billion Euro in 2018, equaling 1.9% of the Union’s GDP, which persists both in goods and services trade accounts. We further examine discrepancies in goods and services trade accounts at the country and country pair level. These are strongest between neighboring countries and exist for members of the Euro Area as well as non-members. Around the 2004 Eastern Enlargement, the EU self-surplus quadrupled. Our estimations suggest that Cyprus, Ireland, Luxembourg, and Sweden are EU Members with the most inaccurate statistical regimes. We observe systematic biases which unlikely root in random measurement error. By contrast, we suspect that a large fraction of the EU’s self-surplus puzzle seems related to fraud in value added tax (VAT). VAT exemptions for exporters provide strong incentives for the over-declaration of true export values. The resulting loss in tax income could amount to as much as 64 billion Euro per year.

Implementation of GCG (Good Corporate Governance) on the Prevention of Fraud Financing in Islamic Banks

Although Islamic Banking operates with Islamic principles, there are still many frauds that are committed deliberately for particular cases. This study aims to determine the extent of the influence of Good Corporate Governance in Islamic banking on indications of fraud, especially at Bank BNI Syariah. This research is quantitative research with primary and secondary data, namely using a sample questionnaire and interviews. While the data analysis is using multiple regression with descriptive analysis. The results of the study concluded that the resulting regression had a very small R square at 34.7%. Finding. The results of the t-test show that partially the independent variables in GCG, namely information disclosure, accountability, responsibility, independence, fairness, are stated to not affect the financing of fraud. This is because the number of R squares has a small effect. After all, it is below 50% so that the impact on the insignificance of the variables in GCG on fraud financing. Therefore, it results from the t-test in which none of the X variables affect variable Y. From the information above, it can be concluded that the GCG variable simultaneously has a significant effect on financing fraud, but if tested partially, the GCG variable has no effect on financing fraud.

Determinants of Financial Statement Fraud Using the Fraud Hexagon Model

This study aims to obtain empirical evidence about the fraud hexagon theory. The research was conducted on manufacturing companies in the consumer goods industry sector listed on the Indonesia Stock Exchange (IDX) for the 2015-2019 period. The sampling method used was non-probability sampling with purposive sampling technique. There are 42 companies as a population with a total of 35 companies as a sample. The data analysis technique used is multiple linear regression. Based on the results of the analysis, it is stated that financial stability and rationalization have a positive effect on indications of financial statement fraud, while ineffective monitoring, CEO education, political connectivity, and CEO duality have no effect on indications of financial statement fraud. The research has implications for the government as a regulator, or for those who use information in financial statements as a consideration in assessing the opportunities for fraudulent actions to occur on the company's financial statements. Keywords : financial statement fraud, fraud hexagon, financial stability, ineffective monitoring, CEO education, rationalization, political connectivity, CEO duality DOI: 10.7176/RJFA/12-23-03 Publication date: December 31 st 2021

A proposal of a suspicion of tax fraud indicator based on Google trends to foresee Spanish tax revenues

This article contributes to the relationship between fiscal fraud and tax collection in the Spanish economy, creating a composite suspicion tax fraud indicator (STFI) based on Google Trends searches to study the dynamics and foresee tax revenues evolution in Spain. Also, we expand knowledge in the field of fraud tax indicators, following the UNODC (2020) and OECD (2016) recommendations. To this purpose, we apply factor analysis to create the composite indicator and, next, we utilize techniques centered on fractional integration (ARFIMA) and fractional cointegration VAR (FCVAR) to assess the STFI behavior against tax collection and GDP. The outcomes indicate that the differencing parameter d is less than 1 in all the time series analyzed. The tax collection and the leading indicator have similar statistical behavior (d ​= ​0.49 and d ​= ​0.40, respectively), which implies mean reversion. On the other hand, GDP will behave similarly to the other two time series, with d ​= ​0.05, which means that the shocks will have a temporary effect on the GDP behavior, and these effects will disappear by themselves in the short term and in less time than the other two time series. FCVAR results indicate a short-lived shock duration due to the error correction term and their short-run stationary behavior. In the end, applying wavelet analysis, we determine that the composite suspicion tax fraud indicator maintains a negative association with tax collection, except in 2017 and 2018, when the high economic growth offsets the fiscal fraud.

Persepsi Auditor atas Konflik Kepentingan dan Perburuan Rente dalam Mendeteksi Indikasi Fraud

This study aims to prove that conflict of interest and rent seeking have a positive effect on indications of fraud based on the auditor’s perception. Indications of fraud in this study using the theory of fraud pentagon which consists of pressure, rationalization, opportunity, capability, and arrogance. Furthermore, conflicts of interest are seen from personal, relational, cultural, and structural indicators. While the indicators of rent seeking are seen from working capital, debt, corporate immunity, creative accounting, and corporate governance. This research is quantitative research using primary data. The population in this study are auditors who work in public accounting firms. The research sample consisted of 100 samples and was obtained using non-probability sampling and incidental sampling methods. The data analysis technique used the Partial Least Square method which consisted of descriptive and verification analysis. The results of the study show that conflicts of interest and rent seeking have a positive and significant effect on indications of fraud. The results of this study support the fraud pentagon theory that conflict-of-interest activities and rent seeking have an influence on indications of fraud.How to Cite: Silooy, N. P., & Novita. (2021). Persepsi Auditor atas Konflik Kepentingan dan Perburuan Rente dalam Mendeteksi Indikasi Fraud. Akuntabilitas: Jurnal Ilmu Akuntansi, 14(2), 255-268.

Pentagon fraud perspective analysis in detecting indications of financial statement fraud

This study aims to obtain empirical evidence regarding the elements of fraud pentagon theory on indications of financial statement fraud. This research was conducted on banking companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2020 period. The method of determining the sample used is non-probability sampling with purposive sampling technique. The number of samples that meet the sample selection criteria are 140 samples, namely 35 banking companies during the four years of observation 2017-2020. The data analysis technique used is multiple linear regression. Based on the results of the analysis, it is stated that the nature of industry and change of directors have a negative effect on indications of financial statement fraud, while personal financial need, rationalization, and CEO duality have no effect on indications of financial statement fraud. This study has implications for investors, creditors, the government and other parties who need financial statement information to consider the elements of the fraud pentagon theory to detect indications of fraudulent financial statements in banking companies.

Red flag behaviors in financial services frauds: a mixed-methods study

PurposeThis study aims to enlist the red flag behaviors exhibited in financial services frauds.Design/methodology/approachA pluralistic mixed methodology was adopted in this study. Data collected via semi-structured interviews were coded, quantified and subjected to descriptive analysis to identify the most frequently exhibited red flag behaviors in financial services frauds. The relative risk of exhibition of the identified red flag behaviors was assessed by intuitively comparing the red flag behaviors identified in financial services frauds (experimental group, n = 24) with the red flag behaviors identified in a heterogeneous control sample of non-financial services frauds (control group, n = 28).FindingsThis study identifies six red flag behaviors likely to be more frequently exhibited in financial services frauds than in non-financial services frauds.Practical implicationsResults of this study can be used to develop a typical behavioral profile of a financial services fraud perpetrator. Active communication of this profile in fraud awareness training can help make fraud conspicuous in the financial services industry.Originality/valueThis study is unique because human behavior as a possible fraud indicator is an under-researched area. Further, this study examines first level of evidence and attempts an ex-post analysis of actual red flag behaviors exhibited in acknowledged fraud cases in which the perpetrator/perpetrators has/have been clearly identified.

THE INFLUENCE OF ISLAMIC CORPORATE GOVERNANCE AND INTERNAL CONTROL ON INDICATIONS OF FRAUD IN ISLAMIC COMMERCIAL BANKS IN INDONESIA

This article aims to analyze the implementation of ICG (Islamic Corporate Governance) and Internal Control on indications of fraud at Islamic Commercial Banks in Indonesia. The method used in this study is to use quantitative analysis with technical data analysis using multiple linear regression. The data used is secondary data obtained from Islamic banking financial reports, amounting to 60 data. The conclusion in this article is the influence of Islamic Corporate Governance which is proxied by the variables of the implementation of DPS duties and responsibilities, the performance of duties and responsibilities of the board of directors, and internal control, on the dependent variable, namely, the indication of fraud in Islamic Commercial Banks in Indonesia of 46.1 percent while the rest 53.9 percent is influenced by other factors which are not used in this study

Detecting Fraudulent Financial Reporting Using Artificial Neural Network

This research aims to examine whether Artificial Neural Network (ANN) method can detect fraudulent financial reporting and whether firms are indicated to commit fraudulent financial reporting. The population in this research are firms listed on the Indonesia Stock Exchange in 2019 and companies that are confirmed to have committed fraudulent financial reporting. In total, 506 data sets were obtained through the purposive sampling technique. The data used in this research were obtained from financial statements. ANN method is used as the data analysis method in this research. Ten variables were used as fraud risk indicators to detect fraudulent financial reporting using ANN. Findings indicate that the developed ANN model can detect fraudulent financial reporting in financial statements. The findings of this research contribute to the literature on methods of detecting indications of financial statement fraud and that it can also be used to assist the auditor's role in detecting material misstatements attributable to fraud

Identification and semi-quantification of Atlantic salmon in processed and mixed seafood products using Droplet Digital PCR (ddPCR)

Fishery products are often subject to substitution fraud, which is hard to trace due to a lack of morphologic traits when processed, gutted, or decapitated. Traditional molecular methods (DNA barcoding) fail to identify products containing multiple species and cannot estimate original weight percentages. As a proof of concept, an Atlantic salmon (Salmo salar) specific ddPCR assay was designed to authenticate mixed food products. The method proved to be specific and able to accurately quantify S. salar when using DNA extracts, even in the presence of DNA from closely related salmon species. The ddPCR estimates correlated well with the percentage of S. salar in artificially assembled tissue mixtures. The effect of common salmon processing techniques (freezing, smoking, poaching with a “Bellevue” recipe and marinating with a ‘Gravad lax’ recipe) on the ddPCR output was investigated and freezing and marinating appeared to lower the copies detected by the ddPCR. Finally, the assay was applied to 46 retail products containing Atlantic or Pacific salmon, and no indications of substitution fraud were detected. The method allows for a semi-quantitative evaluation of the S. salar content in processed food products and can rapidly screen Atlantic salmon products and flag potentially tampered samples for further investigation.

PENGGELAPAN PAJAK TINJAUAN MORAL PERPAJAKAN (STUDI KASUS KANTOR PELAYANAN PAJAK PRATAMA MAKASSAR SELATAN)

This study aims to determine the Tax evasion of the Moral Review of Taxation (Study of South Makassar Pratama Tax Office). This research method uses descriptive qualitative research.The results of the study have explained that in knowing how the government can improve tax morale so as to minimize tax evasion at South Makassar KPP is to warn taxpayers about the importance of paying taxes in order to avoid tax sanctions. This is also done in order to improve taxpayer tax morale as seen from the sub-concepts of Pre-Conventional Stages, Conventional Stages, Post-conventional Stages, Attitudes towards Behavior, Subjective Norms, and Behavioral Control. Whereas in discussing the causes of taxpayers to commit tax evasion, it can be seen from financial statement analysis, sales analysis, or contract analysis, then after finding an irregularity in the taxpayer's financial report, an interview can be conducted with the taxpayer to find out the indication of fraud, namely the taxpayer who is has indications of committing fraud based on pressure, opportunity, rationalization, ability, or arrogance.

IDENTIFICATION AND ASSESSMENT OF AUDIT RISK AND FRAUD RISK ON THE FIELD OF PUBLIC PROCUREMENT

The need to strengthen control/audit on the field of public procurement was imposed after the enactment in 2016 of the new legislative package on the field. Starting from the legislation in the field of public procurement, from the practice in the field and the current economic context, this paper presents the procedures for assessing fraud, as well as concrete examples of indications of fraud specific to the field of public procurement. Some examples of indications of fraud identified and presented in the paper refer to: the possibility of taking bribes for the award of certain contracts, links between the persons involved in the award procedures and members of their families, disclosure of certain information concerning the offer, coercion/exclusion, dubious evaluation of bidders, procurement procedures in complicity.

Pengaruh Fraud Diamond Terhadap Indikasi Kecurangan Laporan Keuangan

F raud in financial statements is a problem that cannot be underestimated. From year to year, cases of fraud are always found. In this case, the role of the auditor profession is needed to detect the possibility of fraud as early as possible, so as to prevent fraud and possibly prolonged scandals. When there is a material misstatement in the financial statements, the information is irrelevant as a basis for decision making because the analysis is not based on actual information. T hi s study aims to analyze the effect of pressure on indications of financial statement fraud, analyze the effect of opportunity on indications of financial statement fraud, analyze the effect of rationalization on indications of financial statement fraud and analyze the effect of capability on indications of report fraud. plantation companies listed on the Indonesia Stock Exchange. The sample in the study was 16 companies during the period 2015 to 2019. The analysis technique used logistic regression analysis. T h e results of the analysis show that pressure, which is proxied by ROA, has a significant effect on the indication of fraudulent company financial statements. The opportunity has a significant effect on the indication of fraud in the company's financial statements. Rationalization has no effect on indications of fraud in corporate financial statements. The capability has no effect on indications of fraudulent corporate financial statements.

The Effect Of Financial Health Levels To The Indication Of Financial Statement Fraud In Transportation Sector

Because of app-based transportation, traditional transportation companies are being abandoned because in terms of practicality, they are less accessible to various groups of people. Therefore, traditional transportation companies compete difficultly and have financial pressure. One example of financial pressure is poor financial health. Based on the Fraud Triangle theory, it is said that if a company is under pressure, the possibility of committing fraud will increase. This study is conducted to find empirical evidence whether the level of financial health could affect the possibility of financial statement fraud. This study is expected to provide knowledge to investors and potential investors how to use the Altman's Z-Score analysis method as a measuring tool for financial health level and the Beneish M-Score as a financial statement fraud red flag measurement tool, in order to avoid fraud in the future. The research method used is the method of causality. The data collected is secondary quantitative data in the form of financial statements of companies in the land public transportation industry for the period of year 2015 until 2019. Descriptive and verificative analysis will be done on these data. After conducting the analysis, it can be concluded that the level of financial health has a significant effect on financial statement fraud indications. But there are many other factors that can explain changes in the likelihood of a company committing financial statement fraud such as opportunity, rationalization and various other types of pressure.

Explainable anomaly detection for procurement fraud identification—lessons from practical deployments

AbstractThis article reports the results of our work to construct a system for the detection of fraudulent behavior in procurement transactions. To solve the problem, we model different types of fraud via separate statistical indicators. We propose a formalized framework to describe the severity of fraud in a unified way regardless of underlying fraud mechanics. Subsequently, we leverage this concept to build indicator ensembles that collect evidence from multiple indicators and deliver an interpretable per transaction score to the procurement audit officer. As a case study, we overview 48 such fraud indicators constructed for our client and describe two examples in detail showing how our formal definitions can be transformed into a practical implementation. The presented results include experiments with all indicators on data covering four years of procurement activity with approximately 216,000 transactions coming from a large government organization in Singapore. The final evaluation of our system shows 67.1% precision in detecting suspicious transactions. The article describes how outcome of our work helped to effectively cope with the problem of anomaly detection explainability and the lessons learned from integrating this solution to operational practices of a procurement department.