The fraud diamond: element in detecting financial statement of fraud

Sari, Maria Mediatrix Ratna; Budiasih, I Gusti Ayu Nyoman; Wirajaya, I Gde Ary; Suprasto, Herkulanus Bambang

doi:10.21744/irjmis.v6n3.621

Cited by 34 publications

(68 citation statements)

References 8 publications

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“…In other words, pressure has a positive effect on fraud. This positive relationship between pressure and fraud can be observed in research by Rukmana (2018); Quraini & Rimawati (2018); Rengganis et al (2019); and Lestari & Henny (2019). Based on the description above, the hypothesis of this research is formulated as follows:…”

Section: Introductionmentioning

confidence: 69%

Fraudulent financial reporting through the lens of the fraud pentagon theory

Anggraini

Suryani²

2021

JAA

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Fraud causes trillions of rupiah in losses in the business world. With the fraud pentagon lens, this study aims to examine whether pressure, opportunity, rationalization, capability and arrogance affect fraudulent financial reporting. This study used 51 financial reports from fraud companies indicated by the Financial Services Authority and 51 financial reports from other companies in similar industry, listed on the Indonesian Stock Exchange from 2009 to 2018. The proxies of fraud pentagon were tested by using the logistic regression. The results showed that pressure, opportunity and rationalization had significant effects on fraudulent financial reporting. Meanwhile, capability and arrogance have no effect. These results indicate that the existence of pressure and rationalization can lead to financial fraud, but opportunity negatively affect fraudulent financial reporting. The results of this study contribute to the development of accounting science and to provide information on the prevention and detection of fraud in companies.

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Section: Introductionmentioning

confidence: 69%

Fraudulent financial reporting through the lens of the fraud pentagon theory

Anggraini

Suryani²

2021

JAA

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“…Descriptive research design has been used in previous studies on fraud (Christian et al, 2019;Rengganis et al, 2019 andUdeh andUgwu, 2018). This research design was applicable in this study because the researcher sought to determine the influence of the four elements of the fraud diamond theory, namely, pressure, opportunity, rationalization and capability on financial statement fraud of listed non-financial firms in Kenya.…”

Section: Methodsmentioning

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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“…a threat financial stability. While research conducted by Yulianti et al (2019), Rengganis et al (2019) and Wailan'An et al (2019) pressure with a proxy financial stability has no effect on fraudulent financial statements.…”

Section: Introductionmentioning

confidence: 87%

MEASURING THE LEVEL OF FRAUD ON FINANCIAL STATEMENTS: MODEL OF FRAUD TRIANGLE (Case Studies on Companies Listed on the Indonesia Stock Exchange in 2014-2018)

Ramdany

Harmenawati

Samukri

2021

Ekobis

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This study aims to measure the level of fraudulent financial statements with the fraud triangle model. The independent variables are pressure, opportunity, rationalization, and the dependent variable is fraudulent financial statements. The population in this study is companies listed on the Indonesia Stock Exchange (IDX) in 2014-2018 with a sample of 100 companies. Data analysis techniques using multiple linear regression. The results show that the pressure with proxies the financial stability and financial target and the opportunity with proxy the nature of industry has significant effect on the financial statement fraud. Meanwhile, the opportunity with proxies the ineffective monitoring and rationalization have not significant effect on the financial statement fraudulent.

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The fraud diamond: element in detecting financial statement of fraud

Cited by 34 publications

References 8 publications

Fraudulent financial reporting through the lens of the fraud pentagon theory

Fraudulent financial reporting through the lens of the fraud pentagon theory

Is the fraud diamond perspective valid in Kenya?

MEASURING THE LEVEL OF FRAUD ON FINANCIAL STATEMENTS: MODEL OF FRAUD TRIANGLE (Case Studies on Companies Listed on the Indonesia Stock Exchange in 2014-2018)

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