The current research studies the usefulness of Cressey’s fraud risk factor framework adopted from SAS No. 99 to prevent fraud from occurring. In accordance with Cressey’s theory, pressure, opportunity and rationalization are existing when fraud occurs. The study suggests variables as proxy measures for pressure and opportunity, and test these variables using publicly available information relating to a set of fraud firms and a sample of no-fraud firms. Two pressure proxies and two opportunity proxies are identified and suggested to be significantly related to financial statement fraud. We find that leverage and sale to account receivable are positively related to the likelihood of fraud. Audit committee size and board of directors’ size are also linked to decrease the level of financial statement fraud. A binary logistic model based on examples of fraud risk factors of fraud triangle model measures the likelihood of financial statement fraud and can assist experts.

Financial statement frauds (FSF)

Increasing concerns about company failures has given rise to the significant role of risk management in organizations. The Institute of Internal Auditors (IIA) has introduced a new framework which specifies that internal auditors' responsibilities include managing risks. This change from traditional to modern obligation may cause internal auditors to be uncertain regarding this function. This study investigates the effects of personal and organizational factors on role ambiguity amongst internal auditors in Malaysia. Survey questionnaires were distributed to 202 internal auditors. The results of this study provide insight into how individual and organizational factors impact the role ambiguity of internal auditors. The findings suggest that individuals with higher competency and autonomy experience lower levels of ambiguity. Furthermore, highly structured companies with in-house internal audit create lower ambiguity for internal auditors in Malaysian companies.