An Epistemology of Fraudulent Financial Reporting: a Business Model Canvas Adoption

  • Authors

    • Samuel Anindyo Widhoyoko
    • Sasmoko .
    • Ezra Peranginangin
    • Jonathan Gultom
    • Sri Handayani
    2018-08-24
    https://doi.org/10.14419/ijet.v7i3.30.18267
  • business Model Canvas, Fraudulent Financial Reporting, Stock Market Fraud.

  • Abstract

    As an emerging trends of business, new development of epistemology is necessary. In the field of forensic accounting and fraud examination, numerous model on how fraud could happen have been evolving innovatively. On the other hand, fraudulent financial reporting scheme has never been explained in an epistemological manner. As business process is growing more sophisticated and complicated these days, an epistemology development must be done grounded on a representative business framework in which, this research employs business model canvas (BMC) by Alexander Osterwalder due to its adaptability and flexibility. This research interprets the elements contained in BMC in the context of fraudulent reporting in stock market through sequential explanation presented in the model.

     

     

  • References

    1. [1] Sutherland EH (1939), Principles of Criminology (4th ed.). Boston: J. B. Lippincott Company.

      [2] Clinard MB & Cressey DR (1954), Other People’s Money: A Study in the Social Psychology of Embezzlement. American Sociological Review. https://doi.org/10.2307/2087778

      [3] Cohen LE & Felson M (1979), Social Change and Crime Rate Trends: A Routine Activity Approach. American Sociological Review 44(4), 588. https://doi.org/10.2307/2094589

      [4] Wolfe BDT & Hermanson DR (2003), The Fraud Diamond : Considering the Four Elements of Fraud. The CPA Journal 2, 38–42.

      [5] Gbegi D & Adebisi J (2013), the New Fraud Diamond Model- How Can It Help Forensic Accountants in Fraud Investigation in Nigeria? European Journal of Accounting Auditing and Finance Research 1(4), 129–138. https://doi.org/10.1017/CBO9781107415324.004

      [6] Albrecht WS, Albrecht CO, Albrecht CC, Mark F & Zimbelman (2012), Fraud Examination.

      [7] Wells JT (2011), Corporate Fraud Handbook (3rd Editio). Wiley International.

      [8] Brennan NM & Mcgrath M (2007), Financial Statement Fraud: Some Lessons from US and European Case Studies. Australian Accounting Review, 17(July), 49–61.

      [9] Association of Certified Faud Examiners (2016), Report to Nations 2016.

      [10] Osterwalder A (2004), the Business Model Ontology a Proposition in a Design Science Approach. Universite De Lausanne. Retrieved from http://www.hec.unil.ch/aosterwa/PhD/Osterwalder_PhD_BM_Ontology.pdf

      [11] Reid GC & Smith JA (2000), What Makes a New Business Start-Up Successful? Small Business Economics 14(3), 165–182. https://doi.org/10.1023/A:1008168226739

      [12] Åstebro T & Bernhardt I (2003), Start-up financing, owner characteristics, and survival. Journal of Economics and Business 55(4), 303–319. https://doi.org/10.1016/S0148-6195(03)00029-8

      [13] Zhang J, Gang H & Jianwen Y (2010), Business Model Innovation -- From Customer Value Perspective. In 2010 3rd International Conference on Information Management, Innovation Management and Industrial Engineering 400–403. https://doi.org/10.1109/ICIII.2010.577

      [14] Liu SS, Lin CY & Y (2007), Building customer capital through knowledge management processes in the health care context. Health Care Management Review 32(2), 92–101. https://doi.org/10.1097/01.HMR.0000267786.94437.57

      [15] McCarthy KH (2012), 5 Strategies for Building a Top-Performing Hospital. Healthcare Financial Management 66, 56–65.

      [16] Mattsson J & Orfila-Sintes F (2014), Hotel Innovation and Its Effect on Business Performance. International Journal of Tourism Research 16(4), 388–398. https://doi.org/10.1002/jtr.1933

      [17] Souto JE (2015), Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management 51, 142–155. https://doi.org/10.1016/j.tourman.2015.05.017

      [18] Burger B & Fuchs M (2005), Dynamic pricing — A future airline business model. Journal of Revenue & Pricing Management 4(1), 39–53. https://doi.org/10.1057/palgrave.rpm.5170128

      [19] Daft J & Albers S (2015), An empirical analysis of airline business model convergence. Journal of Air Transport Management 46, 3–11. https://doi.org/10.1016/j.jairtraman.2015.03.008

      [20] Beasley MS, Carcello JV & Hermanson DR (1999), Fraudulent Financial Reporting: 1987-1997 An Analysis of U.S. Public Companies Research. Dana 1–67.

      [21] Schilit HM & Perler J (2010), Financial Shenanigans (13th ed.). McGraw-Hill Higher Education.

      [22] Plessis JJ du, Hargovan A & Bagaric M (2012), Principles of Contemporary Corporate Governance. Cambridge University Press.

      [23] Davis JH, Schoorman FD & Donaldson L (1997), Toward a stewardship theory of management. Academy of Management Review 22(1), 20–47. https://doi.org/10.5465/AMR.1997.9707180258

      [24] Simunic DA (1984), Auditing , Consulting , and Auditor Independence. Journal of Accounting Research 22(2), 679–702. https://doi.org/10.2307/2490671

      [25] Sasmoko, Widhoyoko SA, Ariyanto & Indrianti (2017), Corruption Early Prevention: Decision Support System for President of the Republic of Indonesia. International Conference on Computing and Applied Informatics 801, 1–8. https://doi.org/10.1088/1742-6596/755/1/011001

      [26] Weaver SC (2012), The Essentials of Financial Analysis. McGraw-Hill Higher Education. https://doi.org/978-0-07-176837-5

      [27] Pigneur Y (2013), Designing Business Models and Similar Strategic Objects: The Contribution of IS. Journal of the Association for Information Systems 14(5), 237–244.

      [28] Rendon JM & Rendon RG (2016), Procurement fraud in the US Department of Defense. Managerial Auditing Journal 31(6/7), 748–767. https://doi.org/10.1108/MAJ-11-2015-1267

      [29] Widhoyoko SA (2017), Fraud in Rights and Contracts A Review of Bankruptcy Case of Livent Inc..pdf. Binus Business Review, 8(1), 31–39. https://doi.org/10.21512/bbr.v8i1.1827

      [30] Soo, B. S. (1999). Accrual response to mandated accounting principles: the case of SFAS Nos. 2 and 34. Journal of Accounting and Public Policy, 18(1), 59–84. https://doi.org/10.1016/S0278-4254(98)10014-5

      [31] Subramanyam KR (1996), The pricing of discretionary accruals. Journal of Accounting and Economics 22, 249–281. https://doi.org/10.1016/S0165-4101(96)00434-X

      [32] Rusmin R., Scully G & Tower G (2013), Income smoothing behaviour by Asian transportation firms. Managerial Auditing Journal 28(1), 23–44. https://doi.org/10.1108/02686901311282489

      [33] Yang C & Tan B (2012), Corporate governance and income smoothing in China. Journal of Financial Reporting an Accounting 10(2), 120–139. https://doi.org/10.1108/19852511211273688

      [34] Ratner I, Stein GT & Weinauer JC (2009), Business Valuation and Bankruptcy (1st ed.). New Jersey: John Wiley&Sons, Inc.

      [35] `American Institute of Certified Public Accountants (2002), AU 316-Consideration of Fraud in a Financial Statement Audit.

      [36] American Institute of Certified Public Accountants (1983), AU 350-Audit Sampling. Retrieved from https://pcaobus.org/Standards/Auditing/pages/au350.aspx

      [37] American Institute of Certified Public Accountants (1989), AU 341-The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern.

      [38] Blankley AI, Hurtt DN & MacGregor JE (2012), Abnormal audit fees and restatements. Auditing 31(1), 79–96. https://doi.org/10.2308/ajpt-10210

      [39] Hilton DJ (2001), The Psychology of Financial Decision-Making: Applications to Trading, Dealing, and Investment Analysis. Journal of Psychology and Financial Markets 2(1), 37–53. https://doi.org/10.1207/S15327760JPFM0201_4

      [40] Kranacher MJ (2006), Financial Statement Complexity: A Breeding Ground for Fraud. The CPA Journal 76(9), 80. Retrieved from http://search.proquest.com.ezaccess.library.uitm.edu.my/docview/212324644?accountid=42518

      [41] Ashton RH, Graul PR & Newton JD (1989), Audit delay and the timeliness of corporate reporting. Contemporary Accounting Research, 5(2), 657–673. https://doi.org/10.1111/j.1911-3846.1989.tb00732.x

      [42] Ariff AM & Hashim Ha (2014), Accounting Irregularities in Related Party Transactions. International Journal of Trade, Economics and Finance, 5(2), 180–183. https://doi.org/10.7763/IJTEF.2014.V5.366

      [43] Khrawish HA, Siam WZ & Jaradat M (2010), The relationships between stock market capitalization rate and interest rate: Evidence from Jordan. BEH -Business and Economic Horizons 2(2), 60–66. Retrieved from www.pieb.cz

      [44] Khan, A., Shin, L.P., Hishan, S.S., Mustaffa, M.S., Madihie, A., & Sabil, S. (2018). Effect of personality traits and learning styles towards students’ academic achievement in Johor Bahru. International Journal of Engineering & Technology, 7 (2.10), 4-9.

  • Downloads

  • How to Cite

    Anindyo Widhoyoko, S., ., S., Peranginangin, E., Gultom, J., & Handayani, S. (2018). An Epistemology of Fraudulent Financial Reporting: a Business Model Canvas Adoption. International Journal of Engineering & Technology, 7(3.30), 305-308. https://doi.org/10.14419/ijet.v7i3.30.18267

    Received date: 2018-08-25

    Accepted date: 2018-08-25

    Published date: 2018-08-24