Detection Techniques of Fraud in Accounting

Sahiti, Arben; Bektashi, Mejdi

doi:10.26417/ejes.v2i1.p96-101

Cited by 3 publications

(4 citation statements)

References 4 publications

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“…Many factors have been linked to these scandals. They include lack of vigilant oversight from the board; self-seeking management; improper business conducted by senior managers; ineffective internal audit functions; lenient regulations; inadequate financial disclosures and shareholder's inattentiveness (Sahiti and Bektashi, 2015).…”

Section: Introductionmentioning

confidence: 99%

Is the fraud diamond perspective valid in Kenya?

Omukaga

2020

JFC

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Purpose The purpose of this study was to determine the influence of the elements of the fraud diamond theory in detecting financial statement fraud among non-financial firms in Kenya. Secondary data used to calculate ratios and figures representing the study variables was collected using a checklist for each of the targeted firms listed in the Nairobi Securities Exchange in Kenya for the 2013-2017 period. Design/methodology/approach Secondary data used to calculate ratios and figures representing the study variables was collected using a checklist for each of the targeted firms listed in the Nairobi Securities Exchange in Kenya for the 2013-2017 period. Convenience sampling technique was used to come up with a sample size of 35 out of the targeted population of 45 non-financial firms listed in Kenya (78% representation). This sample size was representative enough of the targeted population. Findings The results strongly supported that all the four elements of the fraud diamond triangle influenced financial statement fraud in Kenya. However, using three parameters, namely R2, predicted sign and standard error, to compare the applicability of either the Yoon et al. (2006) or the modified Jones (1991), our study findings are mixed. It is therefore imperative that a new model should be developed in detecting earnings management in the Kenyan context. Note that including other variables will to a greater extent increase the explanatory power in detecting earnings management practiced by non-financial firms listed in Kenya. Research limitations/implications Use of secondary information in the study was one limitation. Certain financial information was missing from some of the targeted firms’ official websites and the Nairobi Securities Exchange research handbooks. The researcher ensured that only non-financial firms whose audited financial statements were easily accessible were included in the study. Firms whose records were not readily available were excluded from the survey. Practical implications Practically, this study enables regulatory authorities in Kenya to understand the extent with which each element of the fraud diamond theory could be relied on in detecting financial statement fraud. Moreover, it will advise them on the areas to lay more emphasis when attempting to detect financial statement fraud using this model. Originality/value The main value of this study is the determination of the key elements of the fraud diamond theory, which have influence on financial statement fraud among non-financial firms listed in Kenya.

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Section: Introductionmentioning

confidence: 99%

Is the fraud diamond perspective valid in Kenya?

Omukaga

2020

JFC

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“…The bank then authorized the prospectus by lending clients' funds along with the expectation of the interest due to the company's asset availability based on the survey done by the bank (Beasley et al, 1999). Using that funds, most of the directors of the companies fraudulently constructed fraudulent financial reporting for the investors such as by: (1) confirming that cash possessed by the company were gainedthrough the sales (Yang & Tan, 2012), (2) instructing the employee to make bogus invoices Samuel, Deoga, Jeannada & Immanuel The Role of Forensic Accountants including shell companies and multiple entries (Sahiti & Bektashi, 2015), and (3) concealing the longterm loans through fraudulent accounts receivable entries and deferred interest expenses (Financial Accounting Standard Boards, 2012).…”

Section: Motives Behind Fraudulent Liquidationmentioning

confidence: 99%

The Roles of Forensic Accountants in Prevention and Detection of Money Laundering in Phoenix Activities

Widhoyoko¹,

Payudha²,

Natasha³

et al. 2019

account.,gov.

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The process of company liquidation is always full of money laundering allegations and vulnerable to fraud. This fraudulent scheme is referred to as phoenix activity. The main purpose of phoenix activity is to avoid liability and expenses, which detriments the stakeholders. This research explains the importance of the role of forensic accountants prior, during, and after bankruptcy. The methodology used in this research is literature review examining the problems through various researches and frameworks. The literature review discusses three aspects related to fraudulent bankruptcy scheme i.e. motivation, the scheme processes and litigation processes. The research concludes that the presence of forensic accountants is important in the insolvency prevention and detection, in their roles as(1) independent and hired experts; (2) professional legal assistance providers of Anti-Money Laundering (AML) and asset manager; (3) business valuation experts; (4) private investigators; and (5) surveillance body for anti-money laundering purposes.

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“…Auditors play a vital role, as do other members of the corporate governance and the reporting ecosystem (EY Report, 2020). The auditors use different fraud detection techniques such as regression analysis, decision tree, neutral networks, Bayesian network, supported vector machines, internal control, firewalls, password and virus protection, data mining and digital analysis software (Sahiti and Bektashi, 2015; Bierstaker et al , 2006) but due to the loopholes in the existing fraud detection techniques the concept of forensic accounting emerges. Forensic accounting is an accounting field that helps detect and prevent financial fraud, reduce corruption and combat financial crimes (Islam et al , 2011).…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

A systematic review on forensic accounting and its contribution towards fraud detection and prevention

Kaur

Sood

Grima

2022

JFRC

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Purpose This paper aims to determine how forensic accounting contributes to fraud detection and prevention and answer the following research questions: What are the standard techniques for fraud detection and prevention; and What are the significant challenges that hinder the application of forensic accounting in fraud prevention and detection? Design/methodology/approach The authors use the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) method to carry out a systematic literature review (SLR) to identify and assess the existing literature on forensic accounting. Findings There exists a positive correlation between forensic accounting and fraud detection and prevention. Moreover, in both the empirical and non-empirical findings, the authors note that fraud is complex, and in carrying out fraud investigations, one must be aware of its complexity. Practical implications Although drug counterfeiting is a sector where forensic accountants have paid less attention, it is a rapidly expanding fraud area. This paper finds that to detect fraud at an early stage, one must increase consumer understanding of basic forensic accounting techniques by implementing accurate supply chain monitoring systems and inventory management controls and conducting adequate and effective regulatory, honest and legitimate customs inspections. Social implications The major factors that restrict forensic accounting are a lack of awareness and education. Hence, it is essential to incorporate forensic accounting in undergraduate and post-graduate courses. Originality/value From the existing literature, it has been observed that very few studies have been conducted in this field using the PRISMA and SLR techniques. Also, the authors carried out a holistic study that focuses on three different areas – fraud detection, fraud prevention and the challenges in forensic accounting.

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Detection Techniques of Fraud in Accounting

Cited by 3 publications

References 4 publications

Is the fraud diamond perspective valid in Kenya?

Is the fraud diamond perspective valid in Kenya?

The Roles of Forensic Accountants in Prevention and Detection of Money Laundering in Phoenix Activities

A systematic review on forensic accounting and its contribution towards fraud detection and prevention

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