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Explaining the Pentagon Model of fraud and providing a comprehensive model of fraudulent financial reporting (FFR)
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Mohammad Mahdi Shakouri   , Ali Asghar TaherAbadi * , Mehrdad Ghanbari , Babak Jamshdi Navid |
| Assistant Prof. of Accounting, kangavar Branch, Islamic Azad University, kangavar, Iran, (corresponding author). taherabady@yahoo.com. |
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Abstract: (958 Views) |
| Fraudulent Financial Reporting (FFR) is one of the most important processes that some companies are involved in. In this study, the aim is to use the Pentagon model to present a comprehensive model of Fraudulent Financial Reporting (FFR) based on Iran's indigenous conditions. In order to test the hypotheses, based on the Generalized Method of Moments (GMM), data from 161 companies listed on the Tehran Stock Exchange were collected during the years 2009 to 2018. In a separate review of the indicators of the Pentagon model, the results indicate that among the pressure indicators, external pressures that financial and credit institutions impose on companies have a high impact on Fraudulent Financial Reporting (FFR). In examining the opportunity index, using the nature of the industry, the evidence suggests that this index is inversely related to Fraudulent Financial Reporting (FFR), and that the lower the index, the greater the likelihood of fraud in the financial statements. In examining the rationalization indicators, the change of independent auditors is of higher importance, and in fact, the large change of independent auditors provides a greater possibility for fraud. In reviewing competence indicators, frequent increases in unusual audit fees may deter independent auditors from disclosing detected fraud in financial reporting and predispose financial statements to fraudulent conduct. Finally, among the indicators of narcissism, sharp changes in stock prices are more important in the field of financial reporting fraud, and the greater the sharp changes in stock prices, the greater the likelihood of financial reporting fraud. In the overall review of indicators, pressure indicators have had the greatest effect on Fraudulent Financial Reporting (FFR). |
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| Keywords: Pentagon Fraud Model, Fraudulent Financial Reporting (FFR), F-Score Model, Index of Capability and Index of Narcissism |
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Full-Text [PDF 1818 kb]
(409 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2021/05/12 | Accepted: 2021/09/4 | Published: 2022/09/1
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