Framework for Detecting Risk of Financial StatementFraud: Mapping the Fraudulent Environment
AbstractThe theme of financial statement fraud is still incipient in the Brazilian academic literature. This work seeks to contribute in this area by constructing a framework of red flags to detect such fraud. To establish this framework, we consulted various sources of information, including academic journals, dissertations, books and pronouncements from regulatory bodies. Based on this analysis, we selected six works to form the framework proposed: the American Institute of Certified Public Accountants (2002), Conselho Federal de Contabilidade (1999), Albrecht and Romney (1986), Eining, Jones and Loebbecke, (1997), Bell and Carcello (2000) and Wells (2005). Together, these works present a total of 266 red flags. As a criterion, we only selected the red flags mentioned by at least two sources, leaving 45 red flags, which we divided into six clusters: internal structure or environment, sector/industry, management, financial situation, accounting reports and auditing services. In general, the formulation of this framework permitted the identification of risk factors found in fraudulent environments.
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Bibliographic InfoArticle provided by Fucape Business School in its journal Brazilian Business Review.
Volume (Year): 4 (2007)
Issue (Month): 3 (September)
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Postal: Fucape Business School Brazilian Business Review Av. Fernando Ferrari, 1358, Boa Vista CEP 29075-505 Vitória-ES
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Web page: http://www.bbronline.com.br/
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financial statement fraud; red flags; risk factors; fraudulent environment;
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