Methodologies in Financial Fraud Detection and Prevention

Research Projects
Publications

Research Projects

Fraud is increasing dramatically with the expansion of modern technology and global communication, resulting in substantial losses to the business. It has escalated to become a global concern and significantly threatens organization. The true extent of fraudulent instances is unknown. However, the reported incidents show an ever-increasing trend in the number and size of frauds. Prior research on the occurrence of fraud has addressed the effectiveness of monitoring mechanism such as good governance, sound internal control procedures and fraud prevention programs. However, research results do not help to fully understand how these factors may mitigate incidences of fraud in developing countries. In addition, incentives to reduce or prevent fraud may not be applicable across various industries.

Fraudulent reporting has been a serious problem that may lead to not direct financial losses and jeopardize the reputation of an organization and its relationships with external stakeholders, such as customers, suppliers, financiers and business partners. According to the agency theory, a conflict of interests between managers and stakeholders has potential agency costs such as management decisions that do not maximize stakeholders’ benefits. Managers may manage reported earnings to justify their actions. Misreporting financial data may lead to an agency cost whereby the public is driven to make non-optimal investment decisions from reported earnings. For instance, in a situation where a company has a high free cash flow, the manager may be engaged in misreporting financial data to show better performance of the company.

Tax fraud is another type of fraud that can erodes the revenue of the nation. Aggressive measures need to be exercised to combat tax fraudsters and rescue the severe financial loss to the country. The income erosion under the current tax system proves to be substantial that compromises the fundamental revenue, efficiency and equity goals of the nation (Murray, 1997). The government’s effort in implementing the goods and services tax (GST) to increase the generation of income for the country will not be successful unless proper monitoring, regulations and proper preventive procedures are in place to curb tax fraud. Although the income tax and GST systems can generate additional revenue for the country, inadequacy in the enforcement and implementation of tax system may result in serious tax evasion cases. As such, it is crucial to develop an effective and efficient mechanism of Malaysian system for income tax and GST.

The most effective remedy to combat fraud is prevention (Button, 2011). Although research on anti-fraud software analysis (Morley, Ball & Ormerod, 2006) and anti-fraud resources (Palasinski, 2013) exist, it is noted that research on the counter fraud strategies used in the public and private sectors are relatively rare (Button & Brooks, 2009). Reports and researches have documented huge losses resulting from fraud, such as non-financial damage to reputation that may have long term negative repercussion. The situation is further exacerbated by a lack of manpower trained in fraud investigation and detection, and identifying red flags. To facilitate fraud investigation and detection, an effective system is critically warranted to ensure organizational sustainability. The system is seen as one of the important tool in forensic investigation activities to improve the current dire situation so as to enhance and improve damage control efforts. Besides, the system would help to overcome the current problem of inadequate monitoring of fraud red flags, notably because red flags are effective indicators of what future actions need to be taken.

Financial Fraud and Corporate Governance for Financial Reporting Quality, Integrity and Transparency

For achieving this goal, this study is going to be a mixed method research. At the first stage, in order to recognize the potential aspects of misreporting reporting, several depth interviews will be conducted with the expert of custom officers and also internal auditors. Then, secondary data analysis will be conducted based on the reported financial statements by Malaysian listed companies for year of 2015 and 2016.

Income Tax System in Elevating the Nation Income: Mitigation of Tax Evasion and Enforcement of GST

This study reviews the literature to understand GST implementation experience of other countries. This study uses two research methods. First, the study conducts focus group discussions (FGD) representing a qualitative method. FGD involves semi structured interviews of staffs of IRB and RMCD on knowledge and expertise, technology-based collection system, monitoring mechanism and regulatory enforcement. Data from the interviews are recorded and transcribed into a text program and transferred into software for analysis. Second, the study conducts survey and experiments involving tax parties. The sample consists of companies from selected industries. Questionnaires are developed from focus group discussion and documented in previous publications. The study conducts contents validation and reliability tests by cross reference to documented scientific evidence and discussions with experts.

Fraud Detection and Prevention Systems to Mitigate Fraud Risk for sustainability of Organizational Performance

This study will focus on public listed companies in Malaysia. Exploratory sequential mixed method research design which combines qualitative and quantitative data will be employed in this research (Cresswell, 2012). Prior to the actual research fieldwork, a preliminary study will be conducted in order to address ethical issue and to validate data collection procedures. The data collection process consists of interviews with participants on their experiences along with experts’ opinions on the issues and literature reviews. At the initial stage, the researchers will review all the relevant literatures on fraud prevention programs. The use of Bloomberg Database will facilitate to capture necessary data to predict the occurrence of financial fraud. Example of Financial fraud prediction technique is Artificial Neural Network (ANN).

Publications

NO	AUTHORS	ARTICLE TITLE	JOURNAL TITLE
1.	Corina Joseph, Juniati Gunawan, Yussri Sawani, Mariam Rahmat, Josephine Avelind Noyem, Faizah Darus	A Comparative Study Of Anti-Corruption Practice Disclosure Among Malaysian And Indonesian Corporate Social Responsibility (CSR) Best Practice Companies	Journal Of Cleaner Production
2.	Zuraidah Mohd Sanusi, Takiah Mohd Iskandar, Noorman	Effects Of Goal Orientation, Self-Efficacy And Task Complexity On Audit Judgment Performance In Financial Misstatement Assessment Tasks	Accounting, Auditing & Accountability Journal
3.	Rohaya Md Noor, Normah Omar, Zuraidah Mohd Sanusi, Soliha Sanusi, Aleezia Alias	Goods And Services Tax (GST) Readiness Among Petrol Stations Operators In Malaysia	Information
4.	Normah Omar, Dr Roshima Hj Said, Zulaikha Amirah Johari	Corporate Crimes In Malaysia: A Profile Analysis	Journal Of Financial Crime
5.	Jamaliah Said, Azida Mohamed	Mitigating Asset Misappropriation Through Integrity And Fraud Risk Elements: Evidence From Emerging Economies	Journal Of Financial Crime
6.	Roshayani Arshad, Noorbijan Abu Bakar, Faizah Othman	Board Competencies, Network Ties And Risk Management Disclosure Practices In Non-Profit Organizations	Journal Of Applied Business Research
7.	Mohd-Daniel Mohd-Nassir, Zuraidah Mohd-Sanusi, Erlane K Ghani	Effect Of Brainstorming And Expertise On Fraud Risk Assessment	International Journal Of Economics And Financial Issues
8.	Razana Juhaida Johari, Zuraidah Mohd Sanusi, Vincent K Chong	Effects Of Auditors’ Ethical Orientation And Self-Interest Independence Threat On The Mediating Role Of Moral Intensity On Ethical Decision Making Process	International Journal Of Auditing
9.	Mohamed Hussain, Alfiatul Rohmah; Sanusi, Zuraidah Mohd Sanusi, Mahenthiran, Sakthi; Hasnan, Suhaily.	Management Motives And Firm Financial Misstatements In Malaysia	International Journal Of Economics And Financial Issues
10.	Zuraidah M. Sanusi, Shayan Motjaba-Nia, Nurul A. Roosle, Ria N. Sari	Governance Mechanisms Of Large Public Listed Firms: Assessment Of Enterprise Risk Management Practices	International Journal Of Economics And Financial Issues
11.	Dewa Gede Wirama, I. Gusti Bagus Wiksuana, Zuraidah Mohd-Sanusi, Soheil Kazemian	Price Manipulation By Dissemination Of Rumors: Evidence From The Indonesian Stock Market	International Journal Of Economics And Financial Issues
12.	Suhaily Hasnan, Hafizah Marzuki And Shuhaida Mohamed Shuhidan	Effects Of Board Characteristics On Financial Restatement In Malaysia	Pertanika Journal Of Social Science & Humanities (JSSH)
13.	Nurul Fatma Aziz,, Muzrifah Mohamed, Suhaily Hasnan, Norfarhani Sulaiman, Rozainun Abdul Aziz	Ownership Structure And Financial Restatement In Malaysia	Pertanika Journal Of Social Science & Humanities (JSSH)
14.	Suhaily Hasnan	Related Party Transactions And Earnings Quality: Does Corporate Governance Matter?	International Journal Of ECONOMICS & MANAGEMENT
15.	Intan Salwani Mohamed	Internal Controls Practices Among Non-Profit Organizations In Malaysia: Empirical Investigation On Segregation Of Accounting Duties	Ponte, Vol 72(11)
16.	Intan Salwani Mohamed, Sharifah Norzehan Syed Yusuf	Risk Management In Disbursement And Repayment System: A Comparison Of Malaysian Islamic Microfinance Providers	Ponte, Vol 72(12)
17.	Norzaidi Mohd Daud, Intan Salwani Mohamed	Factors That Influence Student’s Behaviour On Online Shopping In Malaysia	Ponte, Vol 72(4)
18.	Jamaliah Said, Md Mahmudul Alam, Nur Nadiah Zulkarnain, Nik Herda Nik Abdullah	Entrepreneurial Orientation For Sustainable Competitive Advantage And Risk Management: Evidence From Government-Linked Companies In Malaysia	International Journal Of Applied Business And Economic Research,14(10),1-15
19.	Rosmawati Harun, Nafsiah Mohamed & Halil Paino	Trainings On The Deterrence Of Misappropriation Of Public Assets: Agency Perspectives	Advanced Science Letter
20.	Yuliansyah, Bruce Gurd, Nafsiah Mohamed	The Significant Of Business Strategy In Improving Organizational Performance	Humanomics
21.	Yuliasyah, Binh Bui & Nafsiah Mohamed	How Managers Use Pms To Induce Behavioural Change In Enhancing Governance	International Journal Of Economics Management (Ijem)
22.	Rinafadhilah Ismail, Roshayani Arshad	The Role Of Board Competencies On Voluntary Risk Disclosure Of Malaysian Listed Companies	American-Eurasian Journal Of Scientific Research
23.	Erlane K. Ghani (Dr.), Nurazrin Tarmezi, Jamaliah Said	The Effect Of Risk Management And Operational Information Disclosure Practices On Public Listed Firms’ Financial Performance	International Journal Of Economics And Management
24.	Nor Farizal Mohammed, Zuraidah Mohd Sanusi, Bany Ariffin Amin Noordin, Agus Harjito	Political Influence And Accounting Quality: A Case Of Post Financial Crisis Of Public Listed Firms In Malaysia	International Journal Of Economics And Management
25.	Rafiqa Irahayu Rosman, Nur Aima Shafie, Zuraidah Mohd Sanusi, Razana Juhaida Johari, Normah Omar	The Effect Of Internal Control Systems And Budgetary Participation On The Financial Performance Of Non-Profit Organizations: Evidence From Malaysia	International Journal Of Economics And Management
26.	Normah Omar, Malcolm Smith And Zulaikha Amirah Johari	Predicting Fraudulent Financial Reporting Using Artificial Neural Network	Journal Of Financial Crime (Accepted)
27.	Jamaliah Said, Md. Mahmudul Alam , Nik Herda Nik Abdullah, Nur Nadiah Zulkarnain, Rita Anugerah	Innovation Risk And Sustainable Competitive Advantages: Empirical Assessment Of Government-Linked Companies In Malaysia	International Journal Of Economics And Management
28.	Nor Farizal Mohammed , Zuraidah Mohd Sanusi, Bany Ariffin Amin Noordin And Agus Harjito	Political Influence On Financial Reporting Quality Of Public Listed Firms In Malaysia	International Journal Of Economics And Management
29.	Rita Anugerah , Rizqa Anita, Ria Nelly Sari, Muhammad Rasyid Abdillah, Takiah Mohd Iskandar	The Analysis Of Reduced Audit Quality Behavior : The Intervening Role Of Turnover Intention	International Journal Of Economics And Management
30.	Rahayu Abdul Rahman, Normah Hj Omar, Asheq Rahman, Soheil Kazemian	Does Shareholder Activism Limit Real Earnings Management: Evidence Of Financial Misreporting In Family And Foreign-Owned Business	International Journal Of Economics And Management
31.	Mohd Farzin Busirin, Nor Balkhish Zakaria, Nurul Azlin Azmi, Intan Salwani, Acella Hermawan	Has The Board Been Effective Enough To Look After The Earnings Manipulation Exercise?	International Journal Of Economics And Management
32.	Nor Ghani Md. Nor, Abul Bashar Bhuiyan , Jamaliah Said, Syed Shah Alam	Innovation Barriers And Risks For Food Processing Smes In Malaysia: A Logistic Regression Analysis.	Malaysian Journal Of Society And Space, 12(2), 167-178
33.	Abul Bashar Bhuiyan , Jamaliah Said , Md. Daud Ismail, Mohd Fauzi Mohd Jani, David Yong Gun Fie	The Innovation Drivers, Strategies And Performance Of Food Processing Smes In Malaysia.	Malaysian Journal Of Society And Space,12(2), 154-166
34.	Marhamah Rafidi, Jamaliah Said, Soheil Kazemian And Nor Balkish Zakaria	Enhancing Banking Performance Through Holistic Risk Management: The Comprehensive Study Of Disclosure Approach	Malaysian Accounting Review, 15(1)
35.	Roshayani Arshad, Noorbijan Abu Bakar, Norlizabinti Omar, Noraini Mohd Nasir	Exploring Performance Measurement From Social Impact Perspective Page 137-154	Malaysian Accounting Review Journal (Mar)
36.	Mohd Daniel Mohd Nassir, Zuraidah Mohd Sanusi, Erlane K. Ghani And Hendi Prabowo	Assessment Of Fraud Risk Performance: Interaction Effects Of Brainstorming And Task Structure Of Government Auditors	Malaysian Accounting Review
37.	Aida Hazlin Ismail, Takiah Mohd Iskandar, Zuraidah Mohd Sanusi, Zaleha Abdul Shukor	Auditors’ Ethical Judgments: Assessing The Effect Of Ethical Sensitivity And Ethical Climate	Malaysian Accounting Review
38.	Md Shamimul Hasan, Normah Omar,	How Do We Assess The Quality Of Corporate Financial Reporting?: A Methodological Issue	Aestimatio - International Journal Of Finance
39.	Normah Omar, Dr Md Shamimul Hasan, Rashidah Abd Rahman, Syed Zabid Hossain	Corporate Attributes And Corporate Accruals	Aestimatio - International Journal Of Finance
40.	Normah Omar, Sh Fadzlon Andul Hamid, Suzana Sulaiman, Rusli Ismail, Nur Shahida Ab Fatah, Norhazeera Mohd Zan	The 4Cs In Harm Reduction Programmes: A Case Of Needle Syringe Exchange Programme Using Total Quality Management	Asia-Pacific Management Accounting Journal
41.	Normah Omar, Suzana Sulaiman, Hussein H Hamood	Target Costing Implementation In Malaysian Automotive Industry: An Exploratory Study.	Asia-Pacific Management Accounting Journal
42.	Normah Omar, Rashidah Ahmad	Credit Card Debt Management: A Profile Study Of Young Professionals	Asia-Pacific Management Accounting Journal
43.	Md. Shamimul Hassan, Normah Omar, Paul Barnes, Hassan, Abm Rashedul	Using Corporate Accruals To Evaluatemanagement Quality:Evidence From Asian Countries	Aestimatio - International Journal Of Finance
44.	Samuel Jebaraj Zain Benjamin, Mazlina Mat Zain, Effiezal Aswadi Abdul Wahab	Political Connections, Institutional Investors And Dividend Payouts In Malaysia	Pacific Accounting Review 28 (2), 153-179
45.	Muhamad Khairulnizam Zaini, Norizan Anwar, Mad Khir Johari Abdullah Sani, Mohammad Noorman Masrek	Validity And Reliability Testing Of Information Security Practices Organizational Agility Instrument: A Pilot Study In Multimedia Super Corridor Status Companies In Malaysia	International Information Institute (Tokyo). Information Volume 19 Issue, 7a, 2749
46.	Siti Aisyah Basri, Ahmad Daud Marsam, Rozaiha Ab Majid, Nor ‘Asyiqin Abu & Nafsiah Mohamed	Reinforcement Tool Of Whistle Blowing To Eradicate Fraud In Public Sector	Malaysian Accounting Review
47.	Roshayani Arshad, Azizah Daud, Nurhayati Ab Samad, Wan Ainulasyiqin Wan Mohdrazali	Organisational Resources And Risk Management, Disclosure In Nonprofit Organisations	PONTE Multidisciplinary Journal Of Sciences & Research
48.	Nor Hafizah Binti Abd Mansor, Intan Salwani Binti Mohamed , Lai Ming Ling, Nawal Binti Kasim	Information Technology Sophistication And Goods And Services Tax In Malaysia	Procedia Economics And Finance