Tax malfeasance of high net-worth individuals in Malaysia: tax audited cases

Rosli, Rasyidah Che; Lai, Ming Ling; Embi, Roslani

doi:10.1108/jfc-11-2016-0070

Cited by 7 publications

(9 citation statements)

References 29 publications

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“…Therefore, the return on asset fraud financial statement allegedly tends to increase this. This analysis is then projected into the future to see the company's ability to generate profits in the future [16].…”

Section: E Financial Targetmentioning

confidence: 99%

Factors Affecting Fraudulent Statement in Forensic Accounting Perspective

Handoko¹,

Hendra²,

Anandita³

2019

IJITEE

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Nowadays the awareness of loss from fraud has been shifted from blue collared employee theft to white collared management fraudulent statement. Forensic accounting becomes one of the solutions to detect this fraudulent statement. On the basic of our premise, the purpose of research to explore empirical evidence regarding financial statement fraud detection factors with net worth method as control variable. Our independent variables were debt to equity ratio, change in net assets, and return on asset. The research was quantitatively on food and beverage manufacturing companies listed on the Indonesia Stock Exchange. We use financial statement year end audited from 2013-2017. We used purposive sample, when selecting the samples. Total of 55 company reports samples were used in this research. We analyzed the data using statistical multiple linear regression analysis. We used statistical software to do the regression, in order to answer the research questions and test the hypothesis. Fraudulent reporting fraud was examined using proxies Beneish M-score. After the statistical test, this research concludes that financial distress factor proxy Debt to Equity Ratio (DER) has no significant effect on fraud detection. Other factor that is financial stability was proxies by changes in total assets (ACHANGE), and financial targets in the proxy of Return on Assets (ROA) both have significant impact on the detection of financial statement fraud.

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Section: E Financial Targetmentioning

confidence: 99%

Factors Affecting Fraudulent Statement in Forensic Accounting Perspective

Handoko¹,

Hendra²,

Anandita³

2019

IJITEE

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“…Tax Professionals refer to the ones working in the taxation industry to include tax practitioners, tax advisers, tax preparers, tax agents, tax accountants, tax intermediaries and tax lawyers. The dummy variable 1 indicates that companies hired tax professionals or 0 otherwise, consistent with Che Rosli et al (2018). Company Age represents total number of years in business, consistent with Sapiei et al (2014).…”

Section: Model Specifications and Variables Measurementmentioning

confidence: 79%

“…This study anticipates that the longer a company in existence, the more cost obligations a company will incur to stay afloat and thus, a company has to find ways to control its ever-growing cost problems and manipulating the books are seen as a quick solution. This may be inspired by the recent studies conducted in Malaysia by Mohamad et al (2017) and Che Rosli et al (2018), but on individual taxpayers, where they found that the older generation of taxpayers were found to be significantly less compliant than their younger counterparts, because of having more financial obligations and commitments. One of the unique characteristics of SMEs where their operations are usually run by a few family individuals may have led to believe that this would be the similarity between the results of SME and individual taxpayers.…”

Section: Duration Of Company In Businessmentioning

confidence: 99%

“…Quite astonishingly, some of the former employees of the Big 4 accounting firms in the USA have been prosecuted and detained in prisons as a result of their wrongdoings (Rostain and Regan, 2014). A study conducted by Che Rosli et al (2018) found that there is a significant positive relationship between the presence of tax professionals and tax evasion practices amongst individual taxpayers. This study revealed that tax professionals are very knowledgeable in developing sophisticated schemes for their clients, and therefore, they must be made responsible and punishable by laws for their ill advice.…”

Section: Literature Reviewmentioning

confidence: 99%

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A cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst small and medium sized enterprises

Ngah

Ismail

Hamid

2021

ARJ

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Purpose The issue of tax evasion through fraudulent financial reporting committed by companies is a major concern facing the tax authority in Malaysia. As such, the purpose of this study is to propose a cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst small- and medium-sized enterprise (SME) taxpayers. Design/methodology/approach The proposed model for this study is designed to explore the extent of the relationships between the independent variables: family ownership firms, company size, presence of tax professionals, company’s duration in business and frequency of tax audits and the moderating variable, i.e. tax audit officers’ level of competence; and the dependent variable, i.e. tax evasion from the perspective of fraudulent financial reporting. This study is grounded on four theories: agency theory, political cost theory, economic deterrence theory and competency theory. Data will be gathered from actual audit cases resolved by the Inland Revenue Board of Malaysia. Ordinary least square regression analysis is proposed for the investigation. Findings This study anticipates that family ownership firms, company size, presence of tax professionals, company’s duration in business and frequency of tax audits could be associated with tax evasion amongst SMEs in Malaysia. This study further proposes that highly competent tax audit officers could mitigate the relationship between frequency of tax audits and tax evasion practices amongst SMEs in Malaysia. Originality/value This study should be able to provide a cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst SMEs in Malaysia. Research on fraudulent financial reporting amongst SMEs is very limited, especially involving the level of competence of the tax audit officers; therefore, this study should contribute to the tax evasion literature by providing a comprehensive model of predicting tax evasion through fraudulent financial reporting using a Malaysian tax setting.

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“…Identifying people or firms with offshore ownership can trigger greater investigations from home country tax authorities (van Hulten, 2012). Given demands by the public and politicians, tax authorities will often focus audit resources on those firms/individuals thought to be hiding income, even if this means hiding it in foreign locations (Che Rosli et al, 2018). Another potential downside of shifting taxes to foreign locations can come in the form of consumer boycotts (Akamah et al, 2018).…”

Section: Taxes and Secrecymentioning

confidence: 99%

Capital Round-Tripping: Determinants of Emerging Market Firm Investments into Offshore Financial Centers and Their Ethical Implications

2021

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Foreign direct investment (FDI) in offshore financial centers (OFCs) is gaining increased attention in business ethics research. Much of this research tends to focus on OFCs as locations where firms can avoid taxes, considering such behavior as unethical. Yet, there is dearth of studies on capital round-tripping by emerging market firms, which is an integral part of this phenomenon. Such round-tripping involves firms sending capital into OFCs only to invest it back in the home country under the guise of “foreign” investment. Presently there is little discussion of the ethical implications of such round-trip FDI activities. In this paper, we conceptualize round-tripping as institutional arbitrage and look at the determinants and ethical implications of such investments into OFCs. Exploring Russian round-tripping we note that firms tend to invest more funds in OFCs that offer a combination of tax and secrecy, or secrecy and property rights protection arbitrage opportunities. In either case firms exploit the opportunities provided by institutional differences between the OFC and Russia while investing back into Russia. Our results tend to indicate that equating OFC investment to tax avoidance and thus deeming it as unethical behavior is too narrow an explanation in the case of emerging economy round-tripping. This is because such investments are often motivated by the unethical behavior of home country stakeholders and may in fact provide benefits to society.

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Tax malfeasance of high net-worth individuals in Malaysia: tax audited cases

Cited by 7 publications

References 29 publications

Factors Affecting Fraudulent Statement in Forensic Accounting Perspective

Factors Affecting Fraudulent Statement in Forensic Accounting Perspective

A cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst small and medium sized enterprises

Capital Round-Tripping: Determinants of Emerging Market Firm Investments into Offshore Financial Centers and Their Ethical Implications

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