Affiliation:
1. Bangor Business School Bangor University Bangor UK
2. Bond Business School Bond University Gold Coast Queensland Australia
3. Deakin Business School Deakin University Geelong Victoria Australia
Abstract
AbstractFinancial statement fraud is a costly problem for society. Detection models can help, but a framework to guide variable selection for such models is lacking. A novel Fraud Detection Triangle (FDT) framework is proposed specifically for this purpose. Extending the well‐known Fraud Triangle, the FDT framework can facilitate improved detection models. Using Benford's law, we demonstrate the posited framework's utility in aiding variable selection via the element of surprise evoked by suspicious information latent in the data. We call for more research into variables that measure rationalisations for fraud and suspicious phenomena arising as unintended consequences of financial statement fraud.
Subject
Economics, Econometrics and Finance (miscellaneous),Finance,Accounting
Reference65 articles.
1. ACFE. (2022)Report to the nations on occupational fraud and abuse. Reportno. Report Number| Date. Place Published|: Institution|.
2. Alawadhi A. Karpoff J. Koski J.L.&Martin G.D.(2023)The prevalence and price distorting effects of undetected financial misrepresentation: empirical evidence. Working Paper. Available from:https://ssrn.com/abstract=3532053[Accessed 2nd May 2023].
3. The occurrence of fibonacci numbers in time series of financial accounting ratios: anomalies or indicators of firm survival, bankruptcy and fraud? An exploratory study;Amershi A.H.;Managerial Finance,2000