Purpose This paper aims to explore the effectiveness of an artificial neural network (ANN) in predicting fraudulent financial reporting in small market capitalization companies in Malaysia. Design/methodology/approach Based on the concepts of ANN, a mathematical model was developed to compare non-fraud and fraud companies selected from among small market capitalization companies in Malaysia; the fraud companies had already been charged by the Securities Commission for falsification of financial statements. Ten financial ratios are used as fraud risk indicators to predict fraudulent financial reporting using ANN. Findings The findings indicate that the proposed ANN methodology outperforms other statistical techniques widely used for predicting fraudulent financial reporting. Originality/value The study is one of few to adopt the ANN approach for the prediction of financial reporting fraud.

PurposeThis study was undertaken with the aim of surveying the perception of the two main stakeholders in procurement system; the contractors and the procurement officers on issues such as accountability, transparency, corruption, integrity and cronyism pertaining to the public procurement system in Malaysia.Design/methodology/approachInterviews were conducted over a nine‐month period in 2007 to gauge the perception of the procurement officers and contractors on procurement issues in Malaysia. The interview data were then transcribed and grouped according to six main themes; transparency, procurement policies and procedures and its implementation, personnel involved in the procurement system, estimation/budget/pricing, professionalism and ethics and timeliness.FindingsOne of the common complaints made by the contractors was prevalence of interference from outside parties and cronyism, which affects the awarding of contracts. The procurement officers were blamed for malpractice and non‐compliance to the policies and procedures of the procurement system.Practical implicationsThe paper deals with sensitive issues and takes several months to successfully gather respondents who willing to give feedback on their experience with the procurement system. The data are first hand information and are carefully transcribed and categorized into categories to help better understanding of the issues raised by the respondents.Originality/valueThe paper deals with sensitive issues and takes several months to successfully gather respondents who willing to give feedback on their experience with the procurement system. The data are first hand information and are carefully transcribed and categorized into categories to help better understanding of the issues raised by the respondents and the private sector.

Abstract-Fraud is a major concern for organizations world-wide. Governments and regulators are now focusing on management's responsibility for effective fraud management programs. It is not a matter whether your organization is large or small or what country or industry your organization is in, as long as humans are involved in organizations, the risk of fraud is real. This paper discusses a local case and our analyses are basically subjected to how the fraud was committed and the detection techniques involved. Beneish Model and Ratios Analysis were selected as detection tools in reference to this case. Being the best tools chosen for this case, those techniques will benefit the auditors and other professionals. They can learn these simple, yet effective methods of financial statement fraud detection. Legal implications and its uses will also be discussed in this paper.Index Terms-Fraud management, detection techniques, beneish model, legal implications.

Recent fraud surveys published by large accounting professional firms in Malaysia (e.g. KPMG 2009, PriceWaterHouseCooper 2009) indicated that preceding actual financial fraud cases, red flags or indicators have always been detected by auditors. Nevertheless such red flags are often ignored or "pushed under the carpet" by companies who are victims of such frauds. The reasons for ignoring the indicators vary from "an effort towards facesaving" to "the amount is too small to affect the company's performance". Using the fraud diamond model, the current study is undertaken to identify what fraud risk indicators are considered as important and whether they are ultimately used by companies to prevent or to detect financial fraud. The study uses a questionnaire survey on three groups of accounting professionals: external auditors, internal auditors and government auditors who are often involved in financial fraud detection and investigation. A total of 135 professionals responded. The results provide basic understanding as to why fraud indicators are often ignored and not taken seriously. Moving forward, the study provides important "what to do list" for accounting professionals in their effort to mitigate financial fraud cases in the future.

Purpose -Aims to identify the most important red flags as individually perceived by auditors, and explores whether auditors' demographic factors might impact on their perception of the relative importance of red flags in Malaysia, particularly in the Klang Valley area. Design/methodology/approach -This study employed a mailed survey as a method of data collection. The respondents to this survey are practicing auditors from audit firms in Kuala Lumpur. The sample of auditors is taken from the population of domestic listed audit firms with the Malaysian Institute of Accountants as of 27 March 2003. A simple random technique is applied to construct the sample. Findings -In general, subjects indicated that the operating and financial stability category was judged as most important, followed by management characteristics and influence over the control environment, and then finally by industry characteristics. Originality/value -It would be interesting to examine whether these fraud risk indicators are indeed helpful in the investigation of reported misconduct and fraudulent cases in Malaysia. The findings may help researchers to develop a new fraud risk indicator that takes into consideration actual instances of fraud in Malaysia. Keywords Auditors, Fraud, Perception Paper type Research paper An intentional act by one or more individuals among management, employees, or third parties, which results in a misrepresentation of financial statements.Fraud is believed to be amongst the most serious corporate problems, and challenges in today's business environment, indeed Palshikar (2002) suggests that:Fraud or scam is a dominant white collar crime in today's business environment . . . many businesses and government organisations, particularly in financial and related services, suffer from fraud of various kinds.The phenomenon is empirically supported by a number of studies; for example, Cain (1999) and the KPMG Australia fraud survey (KPMG, 2002) each indicate that over 50 per cent of all respondents surveyed believed that fraud is a major business problem. Similarly, reviews of fraud cases by Rezaee ( 2004) revealed that financial statement