EconPapers    
Economics at your fingertips  
 

Predictive Relationships among the Elements of the Fraud Diamond Theory: The Perspective of Accountants

Williams Kwasi Peprah ()

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2018, vol. 8, issue 3, 141-148

Abstract: This study researched the predictive relationships among the elements of fraud diamond theory and how accountants rank these relationships for early detection of fraud. A ranking Likert scale questionnaire on the four elements of Pressure/incentive, opportunity, rationalization, and capability were randomly distributed and answered by 100 accountants who are members of the Institute of Chartered Accountants, Ghana. Based on Spearmen's rank order correlation, positive linear relationships were found to exist among all the four elements of the fraud diamond theory. Regarding predictive ranking of fraud occurrences from the perspective of accountants, the study noted that in order from large to small these probabilities are: Capability/Opportunity 0.611, Capability/Rationalization 0.574, Pressure/Rationalization 0.518, Opportunity/Rationalization 0.463, Capability/Pressure 0.266 and Pressure/Opportunity 0.212. Capability/Opportunity, Capability/Rationalization, and Pressure/Rationalization give a large prediction of fraud happening; Opportunity/Rationalization gives a medium prediction and Capability/Pressure, and Pressure/Opportunity provide a small prediction. The study, therefore, concluded that when the opportunity is minimized, potential fraudsters’ capability can be rendered redundant through supervision and when rationalization is made difficult, potential fraudsters delay or avoid their act of fraud. Policy-makers should, therefore, consider policies that reduce the opportunity to commit fraud and rationalization should be given much attention. Effective supervision must be intensified to control capability.

Keywords: Fraud Diamond Theory; Fraud Triangle Theory; pressure; opportunity; rationalization; capability; fraud; Financial Statement Fraud (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hrmars.com/hrmars_papers/Predictive_Relatio ... e_of_Accountants.pdf (application/pdf)
http://hrmars.com/hrmars_papers/Predictive_Relatio ... e_of_Accountants.pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:8:y:2018:i:3:p:141-148

Access Statistics for this article

More articles in International Journal of Academic Research in Accounting, Finance and Management Sciences from Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences
Bibliographic data for series maintained by Hassan Danial Aslam ().

 
Page updated 2019-02-02
Handle: RePEc:hur:ijaraf:v:8:y:2018:i:3:p:141-148