Fraud Reduction Research Articles

Does Bank Monitoring Reduce Corporate Misreporting? Evidence from Foreign Bank Entry in China

We propose a model of bank monitoring and borrower financial misreporting. Using the staggered liberalization of the banking sector in China as a natural experiment, we find that, consistent with the model’s prediction, entry by more efficient foreign banks reduces corporate misreporting fraud. Fraud reduction is greatest among borrowers of foreign banks, but fraud also drops among borrowers of domestic banks, suggesting a spillover effect. As predicted by the model, fraud reduction is greatest for borrowers with higher levels of fixed assets or lower levels of current assets. Our evidence suggests that improved bank monitoring reduces financial misreporting. This paper was accepted by Tomasz Piskorski, finance. Funding: M. Li acknowledges support from the National Science Foundation of China [Project 71402078] and the Social Science Foundation of Tsinghua University [Project 2013WKZD004]. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2022.02414 .

Enhancing Financial Integrity in Ghanaian Microfinance Institutions Through Forensic Auditing: Assessing Its Role in Fraud Reduction

Enhancing Financial Integrity in Ghanaian Microfinance Institutions Through Forensic Auditing: Assessing Its Role in Fraud Reduction

Compliance combined with LGPD as a tool to combat corruption

This is research on Compliance acting as a risk prevention model in the management of organizations, addressing the reduction of fraud and corruption risks. Due to this entire scenario, the following problem arises: What is the significance of Compliance in relation to the management of organizations? The objective of this study is to present the importance of companies adopting and following the Compliance program, taking into account this mechanism for preventing risks of an illicit nature. The specific objectives aim to identify and conceptualize corruption and organizational fraud; the importance of Digital Compliance in business management has been demonstrated; understand Digital Compliance as a Compliance mechanism, analyzing how its application can directly affect organizations; research good practices such as Compliance strategies. The test work will be developed through the analysis of the importance of implementing Digital Compliance in the organizational environment with the aim of prevention, in addition to indicating and reducing issues related to the risks of fraud and corruption.

SAP Integration Boosts Financial Transparency in Indonesia

This study evaluates the implementation of the SAP system at PT. Kimia Farma Pharmacy Sidoarjo Business Unit and its impact on financial report transparency. Using a descriptive qualitative method involving interviews, observation, and documentation, the research found that only four of nine SAP modules are used, yet the system is well-implemented. The SAP system enhances financial report transparency by meeting key transparency characteristics, thereby reducing fraud and ensuring accurate financial disclosures. This suggests that even partial SAP implementation can significantly improve financial transparency. Highlight: Limited Modules: Four of nine SAP modules are effectively utilized. Transparency Boost: SAP system enhances financial report transparency significantly. Fraud Reduction: Improved transparency reduces fraud and ensures accurate financial disclosures. Keyword: SAP system, financial transparency, qualitative analysis, Kimia Farma, financial reporting

Role of Forensic Investigations in Reduction of Financial Fraud Among Commercial Banks in South Sudan

Financial fraud poses a significant challenge to the banking sector globally, including South Sudan. This study aimed to investigate the effectiveness of forensic investigations in mitigating financial fraud within commercial banks. Employing a mixed-methods approach and an explanatory research design, the study targeted 119 respondents and nine commercial banks. Data was analysed using descriptive statistics and regression analyses. The findings revealed a strong association between increased levels of forensic investigations and a significant reduction in financial fraud among commercial banks in South Sudan. The study emphasized the crucial role of adopting sophisticated technologies like data analytics and forensic accounting techniques, as well as implementing robust internal control mechanisms, in enhancing the effectiveness of forensic investigations. Through bolstering forensic investigation practices, not only can financial fraud be curbed, but the overall integrity and trustworthiness of South Sudan's banking sector can be enhanced. To address financial fraud effectively, the study recommended that commercial banks invest in advanced forensic investigation tools and technologies, enabling them to better detect and prevent fraudulent activities. Furthermore, enhancing the training and capacity-building of forensic professionals within these institutions was identified as a means to improve their effectiveness in dealing with fraud. Strengthening internal control systems and fostering a culture of transparency and accountability were also highlighted as vital steps. This research holds significance in informing policy and practice within South Sudan's banking sector. Through highlighting the effectiveness of forensic investigations in combating financial fraud, the study emphasizes the importance of prioritizing forensic capabilities within commercial banks. Moreover, it contributes to the existing literature on forensic investigations and financial fraud, offering valuable insights for researchers and policymakers alike

Blockchain for data protection and cyber fraud reduction: systematic literature review and technology adoption dynamics among gen Y and Z

PurposeThe purpose of this study is to investigate the role of blockchain technology in reducing online fraud among Gen Y and Gen Z.Design/methodology/approachThis study uses a two-phase approach. Firstly, a systematic literature review is conducted to examine various aspects of blockchain technology and cyber security. Secondly, the Technology Adoption Model is used to study the adoption dynamics of blockchain-based platforms for online data exchange among 415 Gen Y and Z users.FindingsThe results indicate that efficiency and security, perceived ease of use, perceived usefulness, and trust have a positive effect on behavioral intention and attitude towards use. This is the first study to examine the role of blockchain technology to reduce fraud among Gen Y and Gen Z.Originality/valueThis study provides new insights into the adoption of blockchain-based platforms for online data exchange among Gen Y and Gen Z. The study highlights the critical areas of concern for the adoption of blockchain technology and provides managerial implications for fintech firms, banks, and e-commerce platforms. It is unique in its focus on the potential for blockchain technology to reduce fraud among Gen Y and Gen Z, which has not been previously explored in the literature.

UNMASKING DECEPTION: FORENSIC ACCOUNTING'S INFLUENCE ON FRAUD REDUCTION IN INDIA'S BANKING INDUSTRY

The significance of forensic accounting in fraud reduction cannot be overstated, particularly in a complex financial landscape like India's banking industry. Forensic accounting serves as a crucial instrument in detecting, investigating, and preventing fraudulent activities that pose substantial threats to the integrity and stability of financial institutions. Through specialized techniques like data analysis, financial examination, and investigative methodologies, forensic accountants play a pivotal role in uncovering fraudulent schemes, tracing illicit financial transactions, and providing evidence for legal proceedings. This study delves into the critical role of forensic accounting in combating fraudulent activities within India's banking sector. With a focus on enhancing understanding and awareness, the research sets out three primary objectives. Firstly, it aims to investigate the current landscape of forensic accounting in India, exploring its methodologies, practices, and regulatory framework. Secondly, the study seeks to assess the level of awareness among bank managers regarding the efficacy of forensic accounting in reducing instances of fraud. Finally, it endeavours to analyse the relationship between the demographic profiles of bank managers—such as age, gender, and years of experience—and their awareness of forensic accounting's role in fraud reduction. Moreover, the findings of this study carry practical implications for various stakeholders, including policymakers, regulators, banking professionals, and industry participants. By gaining insights into the awareness levels of bank managers regarding forensic accounting and its efficacy in fraud reduction, policymakers and regulators can develop targeted interventions to enhance training, education, and awareness initiatives within the banking industry. The study's methodology involved interviews with 200 bank managers, allowing for a comprehensive assessment of the impact of forensic accounting on fraud reduction within India's banking industry.

Impact of Forensic Accounting on Fraud Management: An Examination of Some Selected Deposit Money Banks in Nigeria

This study examined the impact of forensic accounting on fraud management, a study of selected deposit money banks in Nigeria. The study used a survey research design and a five-point Likert scale to collect data used for the analysis of the research work. Regression Analysis and Analysis of (Variance (ANOVA) were used to analyze the data collected. The results revealed that forensic accounting has positive and significant impact on fraud prevention, fraud detection and fraud reduction in deposits money banks in Nigeria. The study has contributed to knowledge as follows: It would save the bank the heavy losses they experience due to fraud. It will serve as a policy statement to guide regulatory authorities. Researchers would also find the study very useful. The study therefore recommended that regulatory authorities in the financial industry should make it a policy and a requirement for all banks in Nigeria to have a forensic unit or department. The banks should invest in updated technology to curb fraud. Fraudulent bank staff should be prosecuted and forensic experts should be hired to provide litigation support to ensure that they are prosecuted. This would serve asa deterrence to others to desist from fraudulent acts.

Influence of Forensic Accounting Services on Fraud Reduction in Nigerian Public Sector Organization

This study on forensic accounting services and fraud prevention in the Nigerian public sector was empirically investigated. The study is vital as it portrays the extent to which the application of forensic accounting services reduces the incidence of fraud in the government sector of Nigeria. Three hypotheses were formulated to guide the investigation and the statistical test of parameter estimates was conducted using Kendall’s Coefficient of Concordance. The study anchored on the White Collar Crime Theory adopted a Survey Design Approach. Hence, data were collected using questionnaire survey administered to the relevant accounting sections of federal government ministries, departments, agencies and parastatals in Awka metropolis. The empirical analysis of the study indicates that the application of forensic accounting service has reduced the incidence of frauds and has also led to fraud prevention at 1% significant level. Thus, the study concludes that the application of forensic accounting services prevents fraud in the in Nigerian public sector organizations. In lieu of this, the study recommended that government should establish a Public Recovery Fund (PRF), where funds collected through forensic accounting should be held and properly used to improve the performance of Nigerian public sector. Also, forensic accounting services are recommended in the Nigerian public sector as it brings fraud and other fraudulent practices to its lowest level.

Fraud Control to Strengthen Internal Control Systems in Local Goverment

The purpose of this research is to analyze the existence and application of the Fraud Control Plan attributes in the work environment of the organization. The research method in this research is descriptive qualitative with a case study at government agencies in Bone Bolango Regency, Gorontalo Province that implements the Fraud Control Plan control tool. The results of this study that this government agencies has a good assessment in realizing the performance of Good Governance in the criteria of "Sufficiently adequate" in an indication of a reduction in fraud and an increase in employee performance in the organization. the important value of the presence of fraud control for agencies is the accountability of each attribute value reflects the transparency of each activity. Control of each agency is more controlled and positively directed and further minimizes the occurrence of fraud. The value that can be drawn from this research is the achievements that have been made optimally so that they can be properly maintained, and for elements that have not been fulfilled so that they can be corrected immediately in accordance with local government procedures and policies. The next researcher should consider the other methods used.

Adoption of the ISA 500 and its Impact on Audit Quality and Fraud Reduction: Evidence from Iraq

This study aims to demonstrate how adopting the international auditing standard 500 will improve audit quality in audit agencies. The Financial Supervision Bureau auditors and the possibility of benefiting from the research results prompted a recommendation to the Auditor Profession Council to adopt the two international standards of evidence and to accomplish the study's objective; the Auditor Profession Council has adopted these standards. A questionnaire form was adopted for this purpose, and 100 questionnaires were distributed to a sample of auditors in Iraqi auditing agencies and 100 questionnaires to auditors in the Federal Financial Supervision Bureau. All 200 distributed questionnaires were retrieved, and the data were analyzed using the statistical analysis programs SPSS 23 and Amos to test hypotheses based on the path analysis model. The research concluded that the Iraqi Accounting and Supervisory Standards Board must adopt International Auditing Standard 500 due to the impact of this standard on audit quality and fraud reduction.

The Effect of Audit Quality on Fraud Reduction: A Moderating Role of International Financial Reporting Standards (IFRS) Adoption in Malaysia and Indonesia

Purpose: This study examines the relationship between audit quality and fraud reduction as well as investigates the adoption of IFRS in developing countries which is Malaysia and Indonesia to provide a comparison between IFRS adopter (Malaysia) and non-adopter (Indonesia) countries in the relationship between audit quality and fraud reduction. Theoretical framework: This study applies two main theories; Policeman Theory and Institutional Theory. Design/methodology/approach: The research data covers listed companies in Malaysia and Indonesia. The total number of firms is 643 from the year 2015 to 2020 with 2502 total observations. Findings: The findings indicate that audit tenure, return on assets (ROA) and size have a significant and positive relationship in the reduction of fraud in Malaysia but audit fee, leverage and size have a significant and negative relationship in the reduction of fraud in Malaysia. Similarly, this study found that audit fee, leverage, return on assets (ROA) and audit tenure has a positive and significant relationship in the reduction of fraud in Indonesia. Besides, size have a negative and significant relationship in the reduction of fraud in Indonesia. This study also found that IFRS has a moderate effect on the relationship between audit fees and audit tenure towards fraud reduction in Malaysia and Indonesia. Research, Practical & Social implications: Future studies are encouraged to examine the effects of Sharia Compliance on the quality of audit processes and the reduction of fraud, especially in areas where Islamic finance is common. It is also suggested that future research should expand the statistical methods used beyond the Ordinary Least Squares (OLS) model to potentially include Logistic Regression Models (LRM). This could lead to a significant improvement in the accuracy and dependability of the research outcomes. Originality/value: The study provides valuable insights into the relationship between audit quality and fraud reduction, as well as the moderating effect of IFRS in Malaysia and Indonesia. The findings have significant practical implications for policymakers, companies, and auditors looking to improve the regulation of auditing practices and reduce the occurrence of fraud.

Forensic Accounting and Financial Crimes: An Empirical Evidence from Operatives and Trainers of the Economic and Financial Crimes Commission, Academy, Nigeria

Financial crimes in the public sector continue to be on the increase despite the effort of the Nigerian government in preventing the incidence of fraud and corruption through measures, such as establishing and strengthening organs of accountability and promoting the global best corporate practices. In view of this challenges, it become necessary to examines the effect of attributes of forensic accountants– Investigation of financial Crime and Corruption Skill (ICC), Knowledge and Expertise (KE), Litigation Support Services (LSS) on the financial crime (FC) in Nigerian public sector. The study employed cross-sectional design and a survey method. of the 110 questionnaires distributed, 53 questionnaires were returned valid and analysed. The study used PLS-SEM (SmartPLS 3.0) and IBM SPSS ver. 20.0 as the primary statistical analysis tools. The results of the study confirm that Knowledge and Expertise and Support Services of a forensic accountant has a significant positive effect on Financial Crime and it shows that investigation of crime and corruption has an insignificant negative effect on financial crime. Thus, the findings revealed that the forensic accountant attributes have significantly higher levels of KE, LSS on FC concerning fraud prevention, detection, management and response. Also, investigation of corruption discourages financial crime though not on high. The implication of this study might result in the overall reduction of fraud and fraudulent acts, promote institutional, regulatory and legal framework, and create awareness amongst the accounting and auditing institutions in the Nigerian public sector.

The Establishment of Circuit Courts and Corporate Fraud

ABSTRACT This paper examines the impact of the establishment of circuit courts on corporate fraud. Using a quasi-natural experiment in China and the difference-in-differences approach, we find that corporate fraud is significantly lower following the establishment of circuit courts. The reduction in fraud is more pronounced for companies with poor internal and external governance and weak information disclosures. The mechanism analysis shows that circuit courts increase litigation risks faced by companies and deter corporate fraud. Overall, the findings suggest that circuit courts are an effective legal institution to constrain corporate fraud.

Tax Fraud Reduction Using Analytics in an East European Country

Tax authorities face the challenge of effectively identifying companies that avoid paying taxes, which is not unique to European Union countries. Limited resources often constrain tax administrators, who traditionally rely on time-consuming and labour-intensive tax audit tools. As a result of this established practice, governments are losing a lot of tax revenue. The main objective of this study is to increase the efficiency of the detection of tax evasion by applying data mining methods in the East European country Lithuania, which has a rapidly developing economy, by applying data mining methods concerning affluence-related impacts. The study develops various models for segmentation, risk assessment, behavioral templates, and tax crime detection. Results show that the data mining technique can effectively detect tax evasion and extract hidden knowledge that can be used to reduce revenue losses resulting from tax evasion. This study’s methods, software, and findings can assist decision-makers, experts, and scientists in developing countries in predicting tax fraud detection.

ЦИФРОВІЗАЦІЯ СТРАХУВАННЯ

Digital technologies are fundamentally transforming the way businesses operate. Digital insurance holds significant growth potential and promising prospects for development. The insurance industry is on the cusp of significant technological changes. Therefore, the objectives outlined in this article are to define the essence of digital insurance and its advantages, characterize trends and development prospects, and describe the challenges and strategies for optimizing digital progress in insurance. Digital insurance entails the digitization of all insurance operations and replacing physical presence in insurance with online interactions. Digital insurance, known as InsurTech, combines traditional understanding of insurance with 21st-century technologies. Artificial intelligence (AI) can be used to analyze large volumes of data for better risk assessment and setting insurance premiums. Blockchain technologies can be used to create secure and transparent insurance contracts. Internet of Things (IoT) devices, such as smartwatches or vehicles, can provide real-time data to aid in risk assessment and insurance claim monitoring. Mobile applications and web platforms can provide convenient access to insurance services and informa- tion for customers. The most significant advantages of insurance digitalization will manifest in the following ways: Increased efficiency and productivity; Improved customer service ;Access to new markets; Proactive risk management; Reduction of fraud. Current trends in digital insurance include the utilization of Big Data, Artificial Intelligence (AI), and the Internet of Things (IoT) technologies. Digital insurance has significant growth potential. The prospects for the development of digital insurance in Ukraine include: Development of digital infrastructure; Development of the fintech industry; Legislative initiatives; Connected insurance. However, for successful development of digital insurance in Ukraine, it is necessary to overcome certain challenges, including: Data privacy issues; Cybersecurity; Regulation; Integration challenges; Change of corporate culture and skills. Three key strategies have been identified to optimize digital progress in the insurance sector: The importance of digital transformation for business success, yet the fear of fully unleashing its potential. Successful investments in digital self-service platforms and robotic process automation. Understanding the necessity for insurers to adopt a new approach to workforce reorganization that promotes genuine digital thinking within the organization. The main obstacle for insurers in becoming digital organizations is change management. Digitalization of the insurance industry provides significant opportunities for the development of this type of entrepreneurial activity, offering advantages for both insurance companies and clients.

Perceived Security of E-Payment System and Reduction in Incidence of Fraud in Kwara State Internal Revenue Service, Nigeria

<p class="Default">Globally, governments have been embracing e-payment system to fast-track revenue collection, and to equally minimize incidence of fraud. However, a major threat to the smooth operation of e-payment in Nigeria is security related issues. Therefore, this study examined perceived security and incidence of fraud, with particular reference to Kwara State Internal Revenue Service (KWIRS), Nigeria. The study obtained a sample of 285 from a population of 996. The findings demonstrated that perceived security dimensions strongly contributed to reduction in incidence of fraud. The study concludes that improvements in e-payment system security, particularly with regard to trust issues, have a significant impact on the amount of fraud reduction in KWIRS. It is recommended that the government ensure the expansion of the country's e-payment system, which necessitates adequate collaboration with the private sector in expanding the existing internet facilities, in order to improve the convenience of use and safety for users<em>. </em>

Deep Learning for Fraud Prediction in Preauthorization for Health Insurance

Health insurance fraud remains a global menace despite the controls implemented to address it; one of such controls is preauthorization. Although, preauthorization promises reduction in fraud, waste and abuse in healthcare, it places undue administrative burden on healthcare service providers and delay in patient care. This limitation has not been thoroughly explored by works of literature in the machine learning domain. In this work, a deep learning model is proposed to learn the preauthorization process for fraud prevention in health insurance for improved process efficacy. In detail, a de-identified HMO preauthorization dataset is used for training the Long Short- Term Memory (LSTM) network. To address class imbalance and avoid data overfitting, the proposed approach utilizes random oversampling and dropout techniques respectively. The experimental results reveal that the proposed model can effectively learn preauthorization request patterns while offering a fraud detection accuracy rate of over 90% with a 2-4% improvement rate in accuracy when compared with previous techniques based on conventional machine learning techniques. The proposed technique is capable of detecting anomalous preauthorization requests based on medical necessity.

Vulnerability and fraud: evidence from the COVID-19 pandemic

This study examines consumer fraud at the onset of the COVID-19 pandemic and provides novel evidence for the opportunity model of predatory victimization. Scammers have taken advantage of the COVID-19 pandemic shock to exploit victims who are already vulnerable and suffering. The number of fraud cases has greatly increased as COVID-19 spread across the U.S., consistent with the vulnerable-to-become-victimization hypothesis based on the opportunity model of predatory victimization. A Google Trends analysis shows that the increase in fraud and scams is attributable to victims’ increased vulnerability rather than to their awareness of fraud and increased motivation to report scams. An improvement in financial literacy is associated with the reduction of finance-related fraud and scams. Finally, we provide important policy implications to protect people from fraud victimization.

In the trail of “Maçã de Alcobaça” protected geographical indication (PGI): Multielement chemometrics as a security and anti-fraud tool to depict clones, cultivars and geographical origins and nutritional value

Food fraud associated with the intentional mislabelling of non-Protected Geographical Indication (PGI) is a concern for consumers. “Maçã de Alcobaça” (Alcobaça apple) is one of the oldest Portuguese PGI products, characteristic of the main apple-growing regions in the country, being of utmost importance to develop traceability and authenticity tools to depict the PGI certification status of these products. Pulp multielement signatures were able to discriminate with moderate accuracy (65.7 %) different Royal Gala clones, grown within the same cultivation area. Moreover, Variable Importance in Projection Partial Least-Squares Discriminant Analysis (VIP-PLS-DA) allowed the discrimination of the Royal Gala samples from different PGI producers with 70.0 % accuracy. Apple PGI cultivars were also discriminated accurately (82.0 %). Expanding the approach to non-PGI production areas, several cultivars could be distinguished, according to their provenance with high accuracy, namely Starking (100.0 % accuracy), Granny Smith (100.0 % accuracy), Fuji (100.0 % accuracy), Royal Gala (86.7 % accuracy) and Reineta (90.3 % accuracy). The PGI fruit's microelement nutritional traits highlighted their higher nutritional value, an important trait for food fraud reduction, informing the consumer of the product authenticity, and providing insights on the nutritional value of these high-value market products.