This Paper aims to present the role of Sarbanes-Oxley Act (SOX) in enhancing the Internal Control (IC) systems in banks, and to explain cons and pros of applying the act in developing countries. The researchers display main topics of SOX Act, the possibilities for applying it in developing countries, and its impacts on IC system of banks. They measured the role of SOX Act by distributing 50 questionnaires on a random group of bank's managers, and accountants in banks of Kurdistan. The questionnaires are analyzed by two statistical tools (Lean Diagnoses Tool and Fuzzy Logic) to get reliable information about the role of SOX Act in enhancing the IC systems in banks. The researchers conclude that applying SOX Act in banks will make the IC systems in banks of developing countries stronger, and will provide managers and shareholders with high quality reports about IC systems in the banks.
{"title":"The Role of Sox Act in Enhancing the Internal Control Systems of Kurdistan Banks","authors":"Thabit H. Thabit, Alan Solaimanzadah","doi":"10.23918/icabep2018p28","DOIUrl":"https://doi.org/10.23918/icabep2018p28","url":null,"abstract":"This Paper aims to present the role of Sarbanes-Oxley Act (SOX) in enhancing the Internal Control (IC) systems in banks, and to explain cons and pros of applying the act in developing countries. The researchers display main topics of SOX Act, the possibilities for applying it in developing countries, and its impacts on IC system of banks. They measured the role of SOX Act by distributing 50 questionnaires on a random group of bank's managers, and accountants in banks of Kurdistan. The questionnaires are analyzed by two statistical tools (Lean Diagnoses Tool and Fuzzy Logic) to get reliable information about the role of SOX Act in enhancing the IC systems in banks. The researchers conclude that applying SOX Act in banks will make the IC systems in banks of developing countries stronger, and will provide managers and shareholders with high quality reports about IC systems in the banks.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126371807","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Earnings management practices lead to inferior quality of financial reporting as they make true performance of the business ambiguous. Developed and developing counties face the possible instances of earnings management despite of the huge availability of regulations and accounting standards governing the entities. This study analyses the possible instances of earnings management in one of the State owned Enterprise namely Fiji Electricity Authority over the period of 2000-2015. Results suggest Fiji Electricity Authority practice earnings management through amortization and depreciation, capitalisation and misclassification of government grants. The results are due to the professional judgment of the entities management and also though the flexibility in the accounting standards followed by SOEs. The number of economic incentives is basically derived from the agency relationship to misreport the outcome of the financial figures.
{"title":"Possible Instances of Earnings Management in SOEs: Case of Fiji Electricity Authority","authors":"Swastika Devi","doi":"10.2139/ssrn.3148458","DOIUrl":"https://doi.org/10.2139/ssrn.3148458","url":null,"abstract":"Earnings management practices lead to inferior quality of financial reporting as they make true performance of the business ambiguous. Developed and developing counties face the possible instances of earnings management despite of the huge availability of regulations and accounting standards governing the entities. This study analyses the possible instances of earnings management in one of the State owned Enterprise namely Fiji Electricity Authority over the period of 2000-2015. Results suggest Fiji Electricity Authority practice earnings management through amortization and depreciation, capitalisation and misclassification of government grants. The results are due to the professional judgment of the entities management and also though the flexibility in the accounting standards followed by SOEs. The number of economic incentives is basically derived from the agency relationship to misreport the outcome of the financial figures.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132775996","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although corporate wrongdoing can reach an immense scale with disastrous ramifications, holding boards accountable has long been perceived as elusive. Under both state fiduciary duty law and federal securities doctrine, directors and officers are liable only if they were aware of corporate failures or reckless in ignoring them. Since providing evidence of awareness or recklessness is exceedingly hard, corporate law scholars have long seen these requirements as raising an almost impenetrable shield over the board. Instead, we demonstrate that the evidentiary path to boards’ state of mind is nowadays more open than it has ever been before, due to the revolutionary growth of compliance departments in recent years. Corporate law literature has largely dismissed compliance as ineffective, fearing that in-house monitors would be too weak or too loyal to constrain corporate wrongdoing. Contrary to this conventional wisdom, we argue that legal and compliance experts’ reports and recommendations, especially if ignored at the time they were made, often expose the board to liability once misconduct is revealed. To support our argument, we turn to parallel case law developments in Delaware fiduciary duty law and federal securities doctrine in the last ten years. We show that, in order to better delineate board liability, state and federal rulings have raised the evidentiary standards, demanding concrete proof that directors were aware of ongoing violations or had received sufficient red flags. In response, courts turn time and again to internal reports by legal and compliance personnel, which are well-suited to offer the requisite evidence. We offer a systematic analysis of Delaware jurisprudence in the last ten years since the landmark Stone v. Ritter ruling, which shows how instrumental legal and compliance personnel are in guiding the board through the multi-pronged requirements of its monitoring duties. We trace similar developments in federal securities class actions under Rule 10b-5. Finally, we discuss a small but growing body of law which imposes personal liability on legal and compliance personnel if they fail to alert the board about ongoing misconduct or gaps in its oversight systems. The threat of personal liability further cements the position of these officers vis-a-vis the board. To show how these developments transformed the legal treatment of massive corporate wrongdoing in practice, we study four recent high-stakes corporate debacles: the Wells Fargo fake accounts scandal, the Yahoo cybersecurity breach, the General Motors ignition switch scandal, and the Washington Mutual mortgage meltdown. Our case studies illustrate that the choices legal and compliance officers make when communicating with the board end up determining its liability. Chief legal and compliance officers, we conclude, have become the leading corporate actors in ensuring sound risk management and ethical leadership for companies.
尽管企业的不当行为可能会达到巨大的规模，并带来灾难性的后果，但长期以来，让董事会承担责任一直被认为是难以捉摸的。根据州信义义务法和联邦证券原则，董事和高级管理人员只有在意识到公司的失败或罔顾这些失败时才负有责任。由于提供知情或鲁莽行为的证据极其困难，公司法学者长期以来一直将这些要求视为对董事会竖起几乎坚不可摧的屏障。相反，我们证明，由于近年来合规部门的革命性增长，如今通往董事会心态的证据之路比以往任何时候都更加开放。公司法文献在很大程度上认为合规是无效的，担心内部监督者过于软弱或过于忠诚，无法约束公司的不法行为。与这种传统观点相反，我们认为，法律和合规专家的报告和建议，尤其是在提出报告和建议时被忽视的情况下，一旦发现不当行为，往往会使董事会承担责任。为了支持我们的论点，我们转向平行判例法的发展在特拉华州信义义务法和联邦证券原则在过去十年。我们表明，为了更好地界定董事会的责任，州和联邦的裁决提高了证据标准，要求提供具体的证据，证明董事们知道正在进行的违规行为，或者已经收到了足够的危险信号。作为回应，法院一次又一次地求助于法律和合规人员的内部报告，这些报告非常适合提供必要的证据。我们对自具有里程碑意义的Stone v. Ritter裁决以来的过去十年中特拉华州的法理进行了系统分析，该分析显示了法律和合规人员如何在指导董事会完成其监督职责的多管齐下的要求方面发挥了重要作用。我们在10b-5规则下的联邦证券集体诉讼中发现了类似的发展。最后，我们讨论了一个虽小但不断增长的法律体系，如果法律和合规人员未能就持续的不当行为或其监督系统中的漏洞向董事会发出警告，则法律和合规人员将承担个人责任。个人责任的威胁进一步巩固了这些高管相对于董事会的地位。为了展示这些发展如何在实践中改变了对大规模企业不法行为的法律处理，我们研究了最近发生的四起高风险企业倒闭事件:富国银行(Wells Fargo)虚假账户丑闻、雅虎(Yahoo)网络安全漏洞、通用汽车(General Motors)点火开关丑闻和华盛顿互惠银行(Washington Mutual)抵押贷款危机。我们的案例研究表明，法律和合规官员在与董事会沟通时做出的选择最终决定了董事会的责任。我们的结论是，首席法律和合规官已成为确保公司健全风险管理和道德领导的主要企业参与者。
{"title":"The Hidden Power of Compliance","authors":"Stavros Gadinis, Amelia Miazad","doi":"10.2139/SSRN.3123987","DOIUrl":"https://doi.org/10.2139/SSRN.3123987","url":null,"abstract":"Although corporate wrongdoing can reach an immense scale with disastrous ramifications, holding boards accountable has long been perceived as elusive. Under both state fiduciary duty law and federal securities doctrine, directors and officers are liable only if they were aware of corporate failures or reckless in ignoring them. Since providing evidence of awareness or recklessness is exceedingly hard, corporate law scholars have long seen these requirements as raising an almost impenetrable shield over the board. \u0000Instead, we demonstrate that the evidentiary path to boards’ state of mind is nowadays more open than it has ever been before, due to the revolutionary growth of compliance departments in recent years. Corporate law literature has largely dismissed compliance as ineffective, fearing that in-house monitors would be too weak or too loyal to constrain corporate wrongdoing. Contrary to this conventional wisdom, we argue that legal and compliance experts’ reports and recommendations, especially if ignored at the time they were made, often expose the board to liability once misconduct is revealed. \u0000To support our argument, we turn to parallel case law developments in Delaware fiduciary duty law and federal securities doctrine in the last ten years. We show that, in order to better delineate board liability, state and federal rulings have raised the evidentiary standards, demanding concrete proof that directors were aware of ongoing violations or had received sufficient red flags. In response, courts turn time and again to internal reports by legal and compliance personnel, which are well-suited to offer the requisite evidence. We offer a systematic analysis of Delaware jurisprudence in the last ten years since the landmark Stone v. Ritter ruling, which shows how instrumental legal and compliance personnel are in guiding the board through the multi-pronged requirements of its monitoring duties. We trace similar developments in federal securities class actions under Rule 10b-5. Finally, we discuss a small but growing body of law which imposes personal liability on legal and compliance personnel if they fail to alert the board about ongoing misconduct or gaps in its oversight systems. The threat of personal liability further cements the position of these officers vis-a-vis the board. \u0000To show how these developments transformed the legal treatment of massive corporate wrongdoing in practice, we study four recent high-stakes corporate debacles: the Wells Fargo fake accounts scandal, the Yahoo cybersecurity breach, the General Motors ignition switch scandal, and the Washington Mutual mortgage meltdown. Our case studies illustrate that the choices legal and compliance officers make when communicating with the board end up determining its liability. Chief legal and compliance officers, we conclude, have become the leading corporate actors in ensuring sound risk management and ethical leadership for companies.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122055447","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Risk shifting behaviour is central to corporate finance theory yet has not been vindicated by empirical research. We show that firms construct their derivative portfolios in ways that support the risk shifting hypothesis. Using hand-collected data from the oil and gas industry we find that financially distressed firms engage more frequently in the three-way collar strategy, and that the usage of this strategy increases following an exogenous increase in the probability of default. The three-way collar involves selling put options (i.e. selling insurance) to generate a cash inflow at inception, which preserves more upside for shareholders but increases downside risk for creditors. While banks monitor the risk of asset substitution effectively our findings suggest that risk-shifting through short derivative contracts (i.e. liability substitution) evades the monitoring of lenders.
{"title":"Financial Distress, Risk Shifting, and the Use of Options","authors":"Håkan Jankensgård, Niclas Andrén","doi":"10.2139/ssrn.3100009","DOIUrl":"https://doi.org/10.2139/ssrn.3100009","url":null,"abstract":"Risk shifting behaviour is central to corporate finance theory yet has not been vindicated by empirical research. We show that firms construct their derivative portfolios in ways that support the risk shifting hypothesis. Using hand-collected data from the oil and gas industry we find that financially distressed firms engage more frequently in the three-way collar strategy, and that the usage of this strategy increases following an exogenous increase in the probability of default. The three-way collar involves selling put options (i.e. selling insurance) to generate a cash inflow at inception, which preserves more upside for shareholders but increases downside risk for creditors. While banks monitor the risk of asset substitution effectively our findings suggest that risk-shifting through short derivative contracts (i.e. liability substitution) evades the monitoring of lenders.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121932193","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the extent to which incorporating current-period and/or cumulative real activities earnings management in default models enhances their predictability. Aiming at Altman’s (1968) Z-score as well as Ohlson’s (1980) O-score predictors, such adjustments help mitigate the overestimation (underestimation) of survival probability for firms with aggressive (with conservative or less) current-period real earnings management. More remarkably, for financial distress detection models, we document significant effectiveness of adjusting for the cumulative earnings management over the previous three years. Consistently, false loan acceptance (rejection) rates for firms with upward (downward or no) earnings management are reduced with our modification on the scoring models.
{"title":"Does Real Earnings Management Matter in Default Prediction?","authors":"Ruei-Shian Wu, H. Lin, Huai-Chun Lo","doi":"10.2139/ssrn.3110862","DOIUrl":"https://doi.org/10.2139/ssrn.3110862","url":null,"abstract":"This study examines the extent to which incorporating current-period and/or cumulative real activities earnings management in default models enhances their predictability. Aiming at Altman’s (1968) Z-score as well as Ohlson’s (1980) O-score predictors, such adjustments help mitigate the overestimation (underestimation) of survival probability for firms with aggressive (with conservative or less) current-period real earnings management. More remarkably, for financial distress detection models, we document significant effectiveness of adjusting for the cumulative earnings management over the previous three years. Consistently, false loan acceptance (rejection) rates for firms with upward (downward or no) earnings management are reduced with our modification on the scoring models.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"73 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114743197","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate the consequences of public disclosure of information from company income tax returns filed in Australia. Supporters of more disclosure argue that increased transparency will improve tax compliance, while opponents argue that it will divulge sensitive information that is, in many cases, misunderstood. Our results show that in Australia large private companies experienced some consumer backlash and, perhaps partly in anticipation, some acted to avoid disclosure. We detect a small increase (decrease) in tax payments for private (public) firms subject to disclosure suggesting differential costs of disclosure across firms. Finally, we find that investors react negatively to anticipated and actual disclosure of tax information, most likely due to anticipated policy backlash rather than consumer backlash or the revelation of negative information about cash flows. These findings are important for both managers and policy makers, as the trend towards increased tax disclosure continues to rise globally.
{"title":"Public Tax-Return Disclosure","authors":"Jeffrey L. Hoopes, Leslie A. Robinson, J. Slemrod","doi":"10.2139/ssrn.2888385","DOIUrl":"https://doi.org/10.2139/ssrn.2888385","url":null,"abstract":"We investigate the consequences of public disclosure of information from company income tax returns filed in Australia. Supporters of more disclosure argue that increased transparency will improve tax compliance, while opponents argue that it will divulge sensitive information that is, in many cases, misunderstood. Our results show that in Australia large private companies experienced some consumer backlash and, perhaps partly in anticipation, some acted to avoid disclosure. We detect a small increase (decrease) in tax payments for private (public) firms subject to disclosure suggesting differential costs of disclosure across firms. Finally, we find that investors react negatively to anticipated and actual disclosure of tax information, most likely due to anticipated policy backlash rather than consumer backlash or the revelation of negative information about cash flows. These findings are important for both managers and policy makers, as the trend towards increased tax disclosure continues to rise globally.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124568107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this short paper, we explain how to build all correlation matrices when some subcorrelations are fixed. The set of solutions is mapped to a particular n-transitivity group of the orthogonal group that we construct explicitly.
{"title":"Completing a Correlation Matrix with Fixed Subcorrelations","authors":"Hamza Guennoun, P. Henry-Labordère","doi":"10.2139/ssrn.3082730","DOIUrl":"https://doi.org/10.2139/ssrn.3082730","url":null,"abstract":"In this short paper, we explain how to build all correlation matrices when some subcorrelations are fixed. The set of solutions is mapped to a particular n-transitivity group of the orthogonal group that we construct explicitly.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123883775","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Purpose The purpose of this paper is to investigate the effect of corporate governance (CG) mechanisms (board size, board independence, separation of chairman and chief executive officer (CEO) roles and external auditor type) on accounting conservatism in Egypt. Design/methodology/approach Archival data relating to CG and accounting conservatism are collected and analysed using multivariate regression techniques. Findings The findings indicate that board independence is positively associated with accounting conservatism. By contrast, board size and auditor type are negatively associated with accounting conservatism, while separating the chairperson and CEO roles has no significant relationship with accounting conservatism. Originality/value To the best of the author’s knowledge, this is one of the first empirical attempts at providing evidence on the relationship between CG and accounting conservatism in Egypt.
{"title":"Corporate Governance Mechanisms and Accounting Conservatism: Evidence from Egypt","authors":"Mahmoud Nasr, C. Ntim","doi":"10.1108/CG-05-2017-0108","DOIUrl":"https://doi.org/10.1108/CG-05-2017-0108","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to investigate the effect of corporate governance (CG) mechanisms (board size, board independence, separation of chairman and chief executive officer (CEO) roles and external auditor type) on accounting conservatism in Egypt.\u0000\u0000\u0000Design/methodology/approach\u0000Archival data relating to CG and accounting conservatism are collected and analysed using multivariate regression techniques.\u0000\u0000\u0000Findings\u0000The findings indicate that board independence is positively associated with accounting conservatism. By contrast, board size and auditor type are negatively associated with accounting conservatism, while separating the chairperson and CEO roles has no significant relationship with accounting conservatism.\u0000\u0000\u0000Originality/value\u0000To the best of the author’s knowledge, this is one of the first empirical attempts at providing evidence on the relationship between CG and accounting conservatism in Egypt.\u0000","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130931715","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. Bradshaw, Theodore E. Christensen, Kurt H. Gee, Benjamin C. Whipple
We use newly available GAAP forecasts to document that traditionally-identified GAAP forecast errors contain 37% measurement error. Correcting for this measurement error, we settle a long-standing debate regarding investor preference for GAAP versus non-GAAP earnings and provide strong evidence of a preference for non-GAAP earnings. We also revisit the use of non-GAAP exclusions to meet analysts’ forecasts when GAAP earnings fall short. Results indicate that 34% of these traditionally-identified meet-or-beat firms are misidentified due to measurement error, and this error masks evidence that firms more frequently exclude transitory rather than recurring expenses for meet-or-beat purposes.
{"title":"Analysts’ GAAP Earnings Forecasts and Their Implications for Accounting Research","authors":"M. Bradshaw, Theodore E. Christensen, Kurt H. Gee, Benjamin C. Whipple","doi":"10.2139/ssrn.2441367","DOIUrl":"https://doi.org/10.2139/ssrn.2441367","url":null,"abstract":"We use newly available GAAP forecasts to document that traditionally-identified GAAP forecast errors contain 37% measurement error. Correcting for this measurement error, we settle a long-standing debate regarding investor preference for GAAP versus non-GAAP earnings and provide strong evidence of a preference for non-GAAP earnings. We also revisit the use of non-GAAP exclusions to meet analysts’ forecasts when GAAP earnings fall short. Results indicate that 34% of these traditionally-identified meet-or-beat firms are misidentified due to measurement error, and this error masks evidence that firms more frequently exclude transitory rather than recurring expenses for meet-or-beat purposes.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124240052","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The financial reporting fraud is still difficult to be detected because of a concealed and sophisticated nature of most fraud schemes, and a lack of effective fraud detection procedure. Fraud schemes have become more complex, sophisticated with the aid of advanced technology, and causes loss and damage to the financial community. A fraud scheme is the way (action) that fraudsters pursue to commit and conceal fraud through misrepresentation or omission of material facts (i.e. misrepresentation or omission of material amount, disclosure, or evidence in the financial reporting). Identifying fraud schemes is an important step for fraud detection. However, the identification of fraud schemes is still a challenging task because fraud schemes have become more complex and sophisticated with the aid of advanced technology and the concealment characteristic of fraud, which causes loss and damage to the financial community. The authoritative literature, SAS 99, 107, and International Standards on Auditing (ISA) 240, 315, and 330 require auditors to assess fraud risk factors (i.e. fraud schemes) and materiality in a client's financial statements. Then, auditors adjust their audit procedures (plan) to address identified fraud risk (schemes) in order to provide reasonable assurance whether the client's financial statements are free of material misstatements.
{"title":"Financial Reporting Fraud Schemes","authors":"Ashraf Elsayed","doi":"10.2139/ssrn.3065417","DOIUrl":"https://doi.org/10.2139/ssrn.3065417","url":null,"abstract":"The financial reporting fraud is still difficult to be detected because of a concealed and sophisticated nature of most fraud schemes, and a lack of effective fraud detection procedure. Fraud schemes have become more complex, sophisticated with the aid of advanced technology, and causes loss and damage to the financial community. A fraud scheme is the way (action) that fraudsters pursue to commit and conceal fraud through misrepresentation or omission of material facts (i.e. misrepresentation or omission of material amount, disclosure, or evidence in the financial reporting). Identifying fraud schemes is an important step for fraud detection. However, the identification of fraud schemes is still a challenging task because fraud schemes have become more complex and sophisticated with the aid of advanced technology and the concealment characteristic of fraud, which causes loss and damage to the financial community. The authoritative literature, SAS 99, 107, and International Standards on Auditing (ISA) 240, 315, and 330 require auditors to assess fraud risk factors (i.e. fraud schemes) and materiality in a client's financial statements. Then, auditors adjust their audit procedures (plan) to address identified fraud risk (schemes) in order to provide reasonable assurance whether the client's financial statements are free of material misstatements.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123156236","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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