Nonprofit organization fraud reporting: does governance matter?

Khadra, Husam A. Abu; Delen, Dursun

doi:10.1108/ijaim-10-2019-0117

Cited by 12 publications

(18 citation statements)

References 41 publications

(54 reference statements)

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“…Ohalehi (2019) emphasizes the significance of an internal control system and a better governance structure (good corporate governance) for philanthropic institutions of all sizes to protect themselves from potential fraud. Abu Khadra and Delen (2020) emphasized the significance of implementing good corporate governance (GCG) in combating fraud. Moreover, Wahyuni-TD et al (2021) tested the effects of GCG and fraud prevention on the performance of zakat institutions with positive results, but there was no significant effect of the principle of fairness of GCG on zakat performance with fraud prevention, indicating that zakat institutions should pay more attention to the application of justice to avoid fraud, and the principle of justice is an early signal that can be used to detect whether there is fraud.…”

Section: Introductionmentioning

confidence: 99%

Islamic Philanthropy as a Deterrent to Potential Fraud

Setiawan

Alim

2022

SJEKI

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This study aims to investigate the utilization of Islamic philanthropic institutions in Indonesia and to recommend fraud-prevention warning signals. This study employs the desk study method to conduct qualitative research with The Allocation to Collection Ratio (ACR), the disbursement speed, and the Amil Right Ratio (RHA) as early warning signals for the possibility of fraud. Data was collected from eight Islamic charitable organizations in Indonesia. Using the ACR method, the results indicated that Badan Amil Zakat Nasional (BAZNAS), Dompet Dhuafa (DD), Institut Zakat Indonesia (IZI), Lazis Muhammadiyah (Lazismu), and Baitul Maal Muamalat (BMM) have a greater potential for fraud based on higher deposited cash balances exceeding 10 percent (11-30 percent ). Due to the lack of sufficient data on website searches and financial reports, the assessment of disbursement speed is not covered in this study. Other results indicated that using the RHA method, the only institution with a RHA greater than 12.5% is RZ (RHA 13.8%), which has a greater potential for fraud due to the orientation of the institution's responsibility towards the institution's interests rather than the interests of non-amil mustahik. This study contributes to providing an overview of the use of funds in Islamic philanthropic institutions and fraud warning signs in order to anticipate and prevent potential fraud.==================================================================================================== ABSTRAK – Filantropi Islam Sebagai Pencegah Potensi Fraud. Studi ini ditujukan untuk mengeksplorasi pendayagunaan lembaga filantropi Islam di Indonesia dan memberikan rekomendasi warning signals sebagai upaya pencegahan terhadap potensi fraud. Studi ini merupakan penelitian kualitatif menggunakan metode desk study dengan tiga metode sebagai warning signal terhadap potensi fraud: metode ACR (Allocation to Collection Ratio), Disbursement Speed dan Rasio Hak Amil (RHA). Studi ini menggunakan objek data delapan lembaga filantropi Islam di Indonesia. Hasil studi menunjukkan melalui metode ACR: Badan Amil Zakat Nasional (BAZNAS), Dompet Dhuafa (DD), Institut Zakat Indonesia (IZI), Lazis Muhammadiyah (Lazismu) dan Baitul Maal Muamalat (BMM) memiliki potensi fraud yang lebih tinggi didasarkan pada saldo kas yang mengendap lebih tinggi di atas 10% (11-30%). Penilaian disbursement speed tidak dijelaskan dalam studi ini dikarenakan tidak adanya informasi yang memadai pada penelusuran website dan laporan keuangan. Hasil studi lainnya menunjukkan melalui metode RHA, satu lembaga dengan RHA >12,5% adalah RZ (RHA 13,8%) memiliki potensi fraud lebih tinggi didasarkan pada orientasi tanggungjawab lembaga yang lebih berpihak kepada kepentingan lembaga daripada kepentingan pihak mustahik non ‘amil. Studi ini berkontribusi memberikan gambaran pendayagunaan dana pada lembaga filantropi Islam, memberikan warning signal terhadap potensi fraud untuk mengantisipasi dan meminimalisir terjadinya potensi fraud.

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Section: Introductionmentioning

confidence: 99%

Islamic Philanthropy as a Deterrent to Potential Fraud

Setiawan

Alim

2022

SJEKI

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“….Information disclosure can track and monitor the activities and programs organized by the NPOs. However, this is depends on the degree of the information that being disclosed and how transparent and accountable is the NPO (Khadra & Delen, 2020;Skoczylas-Tworek, 2020). This is because in some cases even in the annual report, there are still fraud occurred.…”

Section: Findings and Discussionmentioning

confidence: 99%

The Value of Financial and Non-Financial Information towards Non-profit Organisations

Hadi

Bakar

Noor

et al. 2022

E-BPJ

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The role of nonprofit organizations has been acknowledged. They are the providers of services that the government cannot handle alone. Accountability is an obligation to conduct and account for the company's performance. Information disclosure is one of the mechanisms used to be accountable to their stakeholders, which are financial and non-financial information. This study explored the importance of financial and non-financial information in NPOs and the Internet as the medium for disclosing information to stakeholders. This study applied a qualitative research design using content analysis. This research found that both types of information are crucial to NPOs. Keywords: Information disclosure; Nonprofit organization; Financial information; Non-financial information eISSN: 2398-4287 © 2022. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians/Africans/Arabians), and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v7i21.3693

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“…Numerous studies have examined the impact of corporate boards in organisations and have reported significant associations between their governance role and various areas such as the auditor quality choice/fraud reporting (Karim et al, 2013;Abu Khadra and Delen, 2020), dividend payout policy (Al-Najjar and Kilincarslan, 2016;Elmagrhi et al, 2017), earnings characteristics/quality (Ji et al, 2015;Yu and Wang, 2018), firm performance/valuation (Brown and Caylor, 2006;Siddiqui, 2015;Khosa, 2017), corporate social responsibility and environmental disclosures (Ullah et al, 2019;Kilincarslan et al, 2020), and risk taking behaviour measured by credit risk (Ko et al, 2019) or R&D intensity (AlHares et al, 2020). Indeed, the agency-based-explanation framework emphasises the control role of the board of directors in monitoring executives' discretion and suggests that internal governance mechanisms provided by the structure of the board (e.g., board size, board independence and chairman/chief executive officer (CEO) duality) help to ensure that boards serve as a trustworthy agent to maximise shareholders' wealth and increase firm value Weir and Laing, 2003;Guest, 2009).…”

Section: The Agency Theory On Corporate Governance and Firm Performancementioning

confidence: 99%

The governance role of shareholders and board of directors on firm performance: an eclectic governance-performance model

Özdemir

Kılınçarslan

2021

IJAIM

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Purpose This study aims to examine the governance role of shareholders and board of directors in determining firm performance through an eclectic multi-theoretic model that integrates structure and incentive functions of agency theory and capability aspect of the resource-based view. Design/methodology/approach The research model uses a large panel data set of 2,364 UK firms over the period 2000–2010 and uses alternative specifications of the model to improve robustness. Findings The results show that the industry experience of major shareholders as a proxy for shareholder capability has a significant positive impact on investee firm performance. The findings also reveal that the lock-in effect of the largest shareholder has a positive impact on performance, whereas the monitoring effectiveness of shareholders is not associated with ownership concentration. Moreover, the results indicate the underlying capabilities of the board of directors and their impact on corporate performance – particularly, the interlocking directorates of executives have a positive impact on firm performance but those of non-executives have a negative one. However, the previous directorship experience of non-executives has a positive impact on performance. Research limitations/implications This study presents a more comprehensive and complete understanding of the governance-performance relationship beyond the narrow or partial explanations provided by single-theory-based studies or those of investigating the effect of various governance tools separately. Practical implications This study provides more insights into the capability dimension of shareholders and the role of incentives in motivating shareholders to exercise stronger oversight on the management rather than just using ownership concentration. Hence, the study can serve as valuable guidance for investors, corporate managers and policymakers. Originality/value To the best of the knowledge, this is the first comprehensive study that uses an eclectic philosophical approach, integrating the agency theory and resource-based view, to not only examine the impact of board of directors but also investigate the governance role of shareholders in modern corporations to understand how shareholders acquire the requisite skills and information, the best practices and processes, and ultimately use the scarce and inimitable resources that help investee firms in improving their performance.

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Nonprofit organization fraud reporting: does governance matter?

Cited by 12 publications

References 41 publications

Islamic Philanthropy as a Deterrent to Potential Fraud

Islamic Philanthropy as a Deterrent to Potential Fraud

The Value of Financial and Non-Financial Information towards Non-profit Organisations

The governance role of shareholders and board of directors on firm performance: an eclectic governance-performance model

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