Fraud Triangle Case Summary

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“Analysis Effectivity of Fraud Triangle to detect and predict of fraudulent financial statement”

Chapter 1
1.1 Background
Financial statement as the information of company condition should be reflect the about its real condition. As auditor has an important role to detect fraud and give reasonable assurance that financial statement free from material statement.
As write on above, financial statement should reflect the real condition of the entity. In nowadays, there’s a lot of accounting scandal included top management and auditor.
From the research which is done by ACFE (Association of Certified Fraud Examiner) on more than 100 countries, in 2014 there are three occupational fraud, asset misappropriate is by far the most common
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(2004) develop fraud prediction models using financial ratios; however, their models suffer from high misclassification rates. Skousen and Wright (2008) use logistic regression to predict fraud roughly 69 percent of the time. Fraud triangle component can’t be research directly, so there are some additional test to determine whether the significant proxy variables could actually be used in the prediction of financial statement fraud (skousen, 2009). Based on skousen’s study (2009) examining the effectiveness of the fraud risk factor framework adopted in SAS No. 99 in detection of financial statement…show more content…
Does Pressure proxies can be used to detect and predict fraudulent financial statement ?
2. Does Opportunity proxies can be used to detect and predict fraudulent financial statement ?
3. Does Rationalization proxies can be used to detect and predict fraudulent financial statement ?
1.3 Purpose and benefit of reasearch
The purpose of this research is to obtain empirical evidence which is the fraud triangle can be used on detection and prediction fraudulent financial statement.
The benefit from this study are to give an information to company management about the factors which is causing fraudulent financial statement to prevent financial statement from material mistatement and to give an understanding of about fraudulent financial statement and how to detect it with proxy from fraud

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