The conception of organisational fraud: the need for rejuvenation of fraud theory

Abstract

Purpose This paper aims to challenge some of the underlying concepts about causation of fraud and in doing so enriches knowledge and insight into the management of fraud. Design/methodology/approach This study is a part of fieldwork carried out in Indonesia. Findings Organisational fraud is an exceptional type of crime. Hence, the underlying antecedents and consequences of fraud in organisation are distinct from other crimes, especially violent crimes. The underlying logic in criminological and sociological theories and literature cannot fully explain the causal factors of fraud in the organisation. This leads to a theoretical discussion about the reconstruction of the fraud theory. Implications and suggestions for further studies are discussed in this study. Originality/value This study provides a new understanding of fraud and its antecedents and consequences. In doing so, it examines the long-standing debate in criminology and sociology about the theories concerning crime causation, as these areas provide the underlying logic of fraud theory.

How to identify norms, laws, and regulations that facilitate illicit financial flows and related financial crimes

“…Previous research has been proficient in studying fraudulent financial reporting (Cooper, Dacin and Palmer, 2013; Gullkvist and Jokipii, 2013; Johnson, Grazioh and Jamal, 1993; Maulidi and Ansell, 2020; Kassem, 2021; Navarrete and Gallego, 2022; Palmer, 2018; Morales, Gendron and Guénin-Paracini, 2014; Ratzinger-Sakel and Tiedemann, 2022; Saluja et al , 2021). Similarly, many studies address the concept of the fraud triangle, comprising three conditions for fraud, namely: motive/pressure, opportunity and rationalization, as well as several possible other conditions for fraud (Cheliatsidou et al , 2023; Homer, 2020; Kagias et al , 2022; Maulidi and Ansell, 2020; Morales, Gendron and Guénin-Paracini, 2014; Saluja et al , 2021). Nevertheless, it seems safe to say that only rarely is financial statement fraud the desired end-result of its perpetrators.…”

Detection of Financial Statement Fraud Using the Diamond Theory Perspective Fraud Method

“…According to Association of Certified Fraud Examiner (ACFE) (2019) fraud is an act of fraud carried out consciously by an individual or group that has a negative impact on the entity or individual. Fraud is formed when individuals or groups work together to commit fraudulent acts (Maulidi & Ansell, 2020). The increase in fraudulent financial reports is a result of increasingly tight global business competition.…”

The Analysis of Fraud in Perspective of Fraud Pentagon Theory: An Empirical Study in Indonesia

“…The word fraud is used to accommodate the type of financial scandal and intentional abuse with the main motive being to enrich themself (ACFE, 2021a). Fraud is a general term and includes all various ways that human ingenuity creates to gain advantages over others, whether financial or non-financial, by means of false representations (Khadra & Delen, 2020;Maulidi & Ansell, 2020). ACFE classify fraud as 3 classifications: corruption, assets misappropriation, and fraudulent statement.…”

“…Lack of understanding about fraudulent behaviour, low morality, opportunities, lifestyle and pressure are some of them (Akomea-Frimpong et al, 2016;Morales et al, 2014;Omar et al, 2016). Motivation also can be the cause of fraud (Free & Murphy, 2015), but it is often influenced by situational and external variables (Maulidi & Ansell, 2020). Rationalisation is still the most important factor that causes fraud (Cressey, 1953;Marks, 2012;Maulidi & Ansell, 2020;Utami et al, 2019;Wolfe & Hermanson, 2004).…”

“…Motivation also can be the cause of fraud (Free & Murphy, 2015), but it is often influenced by situational and external variables (Maulidi & Ansell, 2020). Rationalisation is still the most important factor that causes fraud (Cressey, 1953;Marks, 2012;Maulidi & Ansell, 2020;Utami et al, 2019;Wolfe & Hermanson, 2004).…”