International Journal of Social Science & Economic Research
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Title:
THE APPROPRIATENESS OF FRAUD TRIANGLE AND DIAMOND MODELS IN ASSESSING THE LIKELIHOOD OF FRAUDULENT FINANCIAL STATEMENTS- AN EMPIRICAL STUDY ON FIRMS LISTED IN THE EGYPTIAN STOCK EXCHANGE.

Authors:
Noha Mohamed Zaki


Volume - 2 Issue - 2, Pages - 2403-2433

Abstract:
This study aims to examine the difference of in the appropriateness of the Fraud Triangle Model and the Fraud Diamond model in assessing the likelihood Fraudulent Financial Statement. As a result of the increase of manager's desires toward maximizing their personal benefits on account of the benefits of other parties; they tend to follow unethical behavior, through committing fraud, which has a negative impact on the reliability of the information represented by the financial Statements. To restrict this unethical behavior some studies (Okoli and Izedonmi, 2014; AlNimer, 2015; Rahimi and Amini, 2015) pointed out to the possibility of relying on external audit process, particularly when it is of a good quality, because of its ability to prevent Fraud in the Financial Statements. The Study uses Logistic Regression Model to investigate this relationship. The sample consists of 100 firms listed in the Egyptian stock exchange for in 2012. The likelihood of Fraudulent Financial Statement is measured by the integrated results of three models that detect fraud, which includes; Altman Z Score, P Score and Beneish M- Score. The results of Regression indicate significant difference between the degree of relevance of Fraud Diamond Model in assessing the likelihood Fraudulent Financial Statements, Compared to that of the Fraud Triangle Model, Despite the absence of significant effect of some factors of Fraud Diamond Model, the results reveal that the factors of Fraud Diamond Model are a good tool for assessing the likelihood Fraudulent Financial Statements in Egypt.

Cite this Article:

[Zaki, Noha Mohamed. "THE APPROPRIATENESS OF FRAUD TRIANGLE AND DIAMOND MODELS IN ASSESSING THE LIKELIHOOD OF FRAUDULENT FINANCIAL STATEMENTS- AN EMPIRICAL STUDY ON FIRMS LISTED IN THE EGYPTIAN STOCK EXCHANGE." International Journal of Social Science & Economic Research 2.2 (2017): 2403-433.]

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