The Moderating role of Capability Element of Fraud on Internal Industry Factors and Fraud Prevention in Saudi Arabian Banking Sector

Popoola, Oluwatoyin Muse Johnson and Rayaan, Baz and Samsudin, Rose Shamsiah and Ahmad, Ayoib B. Che (2016): The Moderating role of Capability Element of Fraud on Internal Industry Factors and Fraud Prevention in Saudi Arabian Banking Sector. Published in: International Conference on Accounting Studies (ICAS 2016) , Vol. 3, No. 1 (30 December 2016): pp. 212-219.

Abstract

Fraud described as an unlawful act that portrays a violation of trust, deceit, or concealment and which does not essentially rely on applying it, or physical force threatening or violence. The Internal factors inspire and dishearten fraud in the sense of outcome deliverables. This paper discusses the impact of internal industry factors such as insider involvement, internal controls, and information sharing on fraud prevention in the Saudi Arabian banking sector. Precisely, this study investigates the moderating role of capability element of fraud on internal industry factors and fraud prevention in the Saudi Arabian banking sector. The findings of this study will help the banking sector in Saudi Arabia especially and Middle East banks in general to improve the fraud prevention system, and for other stakeholders, it will help them uncover critical areas in fraud schemes that deserve immediate and prompt attention.

• Item Type: MPRA Paper
• Language: English
• Keywords: Internal industry factors, capability element of fraud, moderator, fraud prevention, Saudi Arabian banking sector
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M0 - General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M40 - General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M41 - Accounting; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M42 - Auditing; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M48 - Government Policy and Regulation; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M49 - Other

References

AICPA. 2002. Statement on Auditing Standards (SAS) No. 99: Consideration of fraud in a financial statement audit. New York: AICPA.

Akelola, S. E. R. A. H. (2012). Fraud in the banking industry: a case study of Kenya (Doctoral dissertation, Nottingham Trent University).

Aiken, L. S., West, S. G., & Reno, R. R. (1991). Multiple regression: Testing and interpreting interactions. Sage.

Akinyomi, O. J. (2012). Examination of fraud in the Nigerian banking sector and its prevention. Asian Journal of Management Research, 3(1), 182-194.

Al-Fawzan, M. A. (2005). Assessing Service Quality in a Saudi Bank. J. King Saud Univ., Vol. 18, Eng. Sci. (1), pp. 101-115, Riyadh (1426H./2005)

Arun, T. (2005). Regulating for development: The case of microfinance. The Quarterly Review of Economics and Finance, 45, 346-357

Barth, J. R., Caprio, G., & Levine, R. (2008). Bank regulations are changing: For better or worse&quest. Comparative Economic Studies, 50(4), 537-563.

Rayaan, B., Samsudin, R. S., Che-Ahmed, A., & Popoola, O. M. J. (2016). Capability Component of Fraud and Fraud Prevention in the Saudi Arabian Banking Sector. International Journal of Economics and Financial Issues,6(4S), 68-71.

Breuer, J. B. (2006). Problem bank loans, conflicts of interest, and institutions. Journal of Financial Institutions, 2(3), 266-285.

Burger, R., & Hatt, S. (2006). “Are you the weakest link?” The FSA's financial crime review. Journal of Financial Regulation and Compliance, 14(3), 304-310.

Calderon, T. G., & Green, B. P. (1994). Internal fraud leaves its mark: here's how to spot, track and prevent it. National Public Accountant, 39(8), 17-17.

Canhoto, A. I., & Backhouse, J. (2007). Profiling under conditions of ambiguity - an application in the financial services industry. Journal of Retailing and Consumer Services, 14(6) 408-419.

Chiezey, U., & Onu, A. J. (2013). The impact of Fraud and Fraudulent Practices on the Performance of Banks in Nigeria. British Journal of Arts & Social Sciences,15(1).12-25

Cohen, J., Cohen, P., West, S. G., & Aiken, L. S. (2003). Applied Multiple regression/correlation analysis for the behavioral sciences, third. Ed. Lawrence Erlbaum Associates, Mahwah, NJ.

COSO. (2013), Internal Control Framework: Committee of Sponsoring Organizations of the Treadway Commission. New York, NY: COSO.

Cressey, D. (1953). Other People’s Money: A study in the social psychology of embezzlement. New Jersey: Patterson Smith Publishing Corporation.19(3), p362-363p.2

Cuomo, A. (2005). Internal Controls and Financial Accountability for Not-for-Profit Boards. New York. Retrieved on June 2, 2015 at www.oag.state.ny.us/charities/charities.html.

Dabbagoglu, K. (2012). Fraud in businesses and internal control system. Journal of Modern Accounting and Auditing, 8(7), 983.

Davis, C., Farrell, R., & Ogilby, S. (2010). Characteristics and Skills of the Forensic Accountant. American Institute of Chicago.

Dixon, R., Ritchie, J., & Siwale, J. (2007). Loan officers and loan 'delinquency' in microfinance: A Zambian case. Accounting Forum, 31, 47-71.

Encarta Dictionary. (2013). Retrieved on June 1, 2015, at www.encarta-dictionary.com

Ewa, U. E., & Udoayang, J. O. (2012). The impact of internal control design on factors? Internal Auditor, June, p. 60.

Stability, 1 (3), 465-500.Fraud Act, 2006. Sections 1-4, UK Laws.

Hoffmann, A. O., & Birnbrich, C. (2012). The impact of fraud prevention on bank-customer relationships: An empirical investigation in retail banking. International Journal of Bank Marketing, 30(5), 390-407

Khanna, A., & Arora, B. (2009). A study to investigate the reasons for bank frauds and the implementation of preventive security controls in Indian banking industry. Int. Journal of Business Science and Applied Management, 4(3).

KPMG (2008). Fraud Trends: The KPMG Fraud Barometer. Kroll Global Fraud Report (2014). Retrieved at http://fraud.kroll.com/ on 22nd November 2014 Lee, T. A., Clarke, F., & Dean, G. (2008). The dominant senior manager and the reasonably careful, skillful, and cautious auditor. Critical Perspectives on Accounting, 19, 677-711.

Macey, J., & O'Hara, M. (2003). The corporate governance of banks. Federal Reserve Bank New York (FRBNY) Economic Policy Review, 91-107.

Mohammad H. A., (2010). "Are Saudi banks productive and efficient?". International Journal of Islamic and Middle Eastern Finance and Management, Vol. 3 Iss 2 pp. 95 – 112 Permanent links to this document:http://dx.doi.org/10.1108/17538391011054354

Popoola, O. M. J. (2014). Forensic Accountants, Auditors, and Fraud: Capability and Competence requirements in the Nigerian Public Sector. A thesis submitted to the Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, in fulfillment of the requirement for the Degree of Doctor of Philosophy. Malaysia.

Popoola, O. M. J., Ahmad, A. B., Samsudin, R. S., Salleh, K., & Babatunde, D. A. (2016). Accountants’ Capability Requirements for Fraud Prevention and Detection in Nigeria. International Journal of Economics and Financial Issues, Vol 6 (S4), 1-10

Silverstone, H., Sheetz, M., Pedneault, S., Rudewicz, F. (2012). Forensic accounting and fraud investigation for non- experts. New Jersey: John Wiley and Sons.

Sitorus, T. W., & Scott, D. R. (2010). Fraud risk factors and auditing standards: A call for the replication of empirical research in an Islamic environment. Arab Journal of Accounting, 13(1), 116-140.

Sengur, E. D. (2012). Auditors'perception of Fraud Prevention Measures: Evidence From Turkey. Annales Universitatis Apulensis: Series Oeconomica, 14(1), 128-138.

Wolfe, D.T., & Hermanson, D.R. (2004). The Fraud Diamond: Considering the Four Elements of Fraud. CPA Journal 74(12)(Dec): 38-42.

Zahra, S. A., Priem, R. L., & Rasheed, A. A. (2007). Understanding the causes and effects of top management fraud. Organisational Dynamics, 36 (2), 122-139.

Zaworski, M. J. (2005). Assessing An Automated, Information Sharing Technology In The Post “9-11” Era - Do Local Law Enforcement Officers Think It Meets Their Needs? A dissertation submitted to the Florida International University in partial fulfillment of the requirements for the degree of Doctor of Philosophy. Miami, Florida.