Contemporary Issues in Audit Management and Forensic Accounting by Grima Simon;Boztepe Engin;Baldacchino Peter J.;

Author:Grima, Simon;Boztepe, Engin;Baldacchino, Peter J.;
Language: eng
Format: epub
Publisher: Emerald Publishing Limited
Published: 2019-11-23T00:00:00+00:00

CONCLUSION

Fraud is a behavior that adversely affects businesses and stakeholders and provides unfair gain to carry out a fraud actors. The fraud is carried out in two ways: against the employees and against the non-business stakeholders. Employee frauds, which are generally made against the enterprises as an abuse of assets, adversely affect the growth and continuity of the enterprises. The negative impact of fraud by other business groups on business is higher than that of employees and negatively affects financial markets. The accounting practices of fraudulent transactions that are generally based on accounting by business management have caused the loss of investor confidence in financial markets. In order to ensure the growth and continuity of the enterprises and establish and sustain the trust in the financial markets, the quality of financial reports should be increased.

In order to increase the quality of financial reports, it is necessary to identify and prevent fraud. Although different approaches are used in the detection of frauds, Fraud Triangle and Fraud Diamond approaches come to the fore in the literature. The Fraud Triangle approach is an improved approach to the elements that cause fraud. According to Fraud Triangle, the elements that cause fraud are pressure, opportunity, and rationalization. Fraud diamond is an improved approach to the fraud triangle. According to the Fraud diamond approach, it is necessary to have the ability to carry out a fraud in individuals in order to bring together the pressure, opportunity, and rationalization that cause the fraud, and to perform the fraudaction. When the conditions for the three elements ripen, the fraud is performed with talent.

Financial reports should be produced in accordance with the accounting principles and standards. For different purposes, management manages the fraudulent financial reports by deliberately changing the information in the financial statements. In this context, financial reports can be analyzed in two groups as fraudulent financial reports and non-fraudulent financial reports. Whether the financial reports are fraudulent or not can be understood by different methods and techniques. The most important method at this point is the effective monitoring and control of the financial report production processes. Apart from effective monitoring and auditing, it is possible to obtain clues about fraudulent financial reports by statistical methods.

In the research, the effect of the fraud diamond on fraudulent financial reports was investigated. In this context, financial table data and activity reports of 26 companies operating in the Borsa İstanbul Manufacturing Industry were used in the study. Financial reports of the companies were divided into two groups as fraudulent and non-fraudulent financial reports. In the grouping process, the Altman Z Score and Pustylnick’s fraud detection methods were used in financial reports. Due to the nature of the methods used to divide the reports into fraudulent and non-fraudulent cases, the tendency of the companies to carry out a fraud on the basis of their financial status is taken into consideration.

According to the Fraud Diamon approach, hypotheses related to pressure, opportunity, rationalization, and capability elements were developed and developed. The hypotheses were developed and and these hypotheses were developed and tested by Logistic Regression analysis.

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