Fraud detection using fraud triangle risk factors

Shaio Yan Huang (), Chi-Chen Lin (), An-An Chiu () and David C. Yen ()
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Shaio Yan Huang: National Chung Cheng University
Chi-Chen Lin: National Taipei University of Business
An-An Chiu: Feng Chia University
David C. Yen: SUNY College at Oneonta

Information Systems Frontiers, 14 pages

Abstract: Abstract The objective of this study is to identify the financial statement fraud factors and rank the relative importance. First, this study reviews the previous studies to identify the possible fraud indicators. Expert questionnaires are distributed next. After questionnaires are collected, Lawshe’s approach is employed to eliminate these factors whose CVR (content validity ratio) values do not meet the criteria. Further, the remaining 32 factors are reviewed by experts to be the measurements suitable for the assessment of fraud detection. The Analytic Hierarchy Process (AHP) is utilized to determine the relative weights of the individual items. The result of AHP shows that the most important dimension is Pressure/Incentive and the least one is Attitude/rationalization. In addition, the top five important measurements are “Poor performance”, “The need for external financing”, “Financial distress”, “Insufficient board oversight”, and “Competition or market saturation”. The result provides a significant advantage to auditors and managers in enhancing the efficiency of fraud detection and critical evaluation.

Keywords: Fraud detection; Fraud triangle; Analytic hierarchy process; AHP; Data mining; Lawshe’s approach (search for similar items in EconPapers)
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10796-016-9647-9

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