Authors retain the copyright without restrictions for their published content in this journal. HSSR is a SHERPA ROMEO Green Journal.
ASSET MISAPPROPRIATION TENDENCY: RATIONALIZATION, FINANCIAL PRESSURE, AND THE ROLE OF OPPORTUNITY (STUDY IN INDONESIAN GOVERNMENT SECTOR)
Corresponding Author(s) : Hasni Yusrianti
Humanities & Social Sciences Reviews,
Vol. 8 No. 1 (2020): January
Purpose: The purpose of this study is to analyze the relationship between Rationalization and Financial Pressure on Asset Misappropriation Tendency by mediating Opportunity in the Indonesian government sector based on the Fraud Triangle perspective.
Methodology: The Population of this study was Indonesian government employees. The Sample method was Purposive Sampling and the survey method was direct surveys, postal mail, and online surveys. The number of respondents was 363 and analyzed using Structural Equation Model with AMOS-based covariance.
Main Findings: The results show that financial pressure, rationalization, and opportunity had a significant positive effect on Asset Misappropriation Tendency. Furthermore, Opportunity mediates the relationship between rationalizations on Asset Misappropriation Tendency; However, Opportunity does not mediate the relationship between Financial Pressure and Asset Misappropriation Tendency.
Implications: This study contributes to the literature on asset misappropriation in the government sector which is rather very limited and supports the Fraud Triangle Theory. It also has several practical implications for being a source of information to formulate policies in fraud prevention and detection that will improve management control systems in the government sector a developing country.
Novelty: A limited study of asset misappropriation in the government sector in a developing country that examines the influence of element strength of Fraud Triangle in Asset Misappropriation which has been criticized by previous researchers.
Download CitationEndnote/Zotero/Mendeley (RIS)
ACFE (2018). Report to The Nations on Occupational Fraud and Abuse: 2018 Global Fraud Study. Association of Certified Fraud Examiners, Inc. Austin - USA.
ACFE. (2015). What is fraud? Retrieved from http://www.acfe.com/fraud101.aspx
ACFE. (2016).Report To The Nations On Occupational Fraud And Abuse. 2016 Global Fraud Study. Association of Certified Fraud Examiners, Inc. Austin - USA.
Albrecht, C., C.C. Albrecht, and S. Dolan. (2007). Financial Fraud: The How and Why Understanding the conditions in which fraud occurs is the key to its detection and prevention. European Business Forum. Issue 29, Summer 2007.
Aquino, K., & Becker, T. E. (2009). Lying in negotiations: How individual and situational factors influence the use of neutralization strategies. Journal of Organizational Behavior, 26(6), 661–679. https://doi.org/10.1002/job.332 DOI: https://doi.org/10.1002/job.332
Arbuckle, J. L. (2013). Amos 22 User Guide: Amos Development Corporation.
BPK-RI (2016). Overview of semester audit results (Ikhtisar Hasil Pemeriksaan Semester). Badan Pemeriksa Keuangan Republik Indonesia. Jakarta. 2016
BPK-RI (2018).Overview of semester audit results (Ikhtisar Hasil Pemeriksaan Semester). Badan Pemeriksa Keuangan Republik Indonesia. Jakarta. 2018.
Baron, R.M. & Kenny, D.A. 1986. The moderator-mediator distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51: 1173-1182. https://doi.org/10.1037/0022-3518.104.22.1683 DOI: https://doi.org/10.1037/0022-3522.214.171.1243
Byrne, B. M. (2010). Structural Equation Modeling with AMOS: Basic Concepts, Applications, and Programming (Second edition ed.). United States of America: Taylor and Francis Group, LLC.
Chadwick, W. E., 2000, Keeping internal auditing in-house, International Auditor p.57, 88.
Cohen, J. et al., (2011). Corporate Fraud and Managers’ Behavior: Evidence from the Press. Entrepreneurship, Governance and Ethics, 95(2), pp.155–199. https://doi.org/10.1007/978-94-007-2926-1_8
Cohen, J., Y. Ding, C. Lesage, and H. Stolowy. (2011). Corporate fraud and managers behavior: preprint Evidence from the press. Journal of Business Ethics 95: 271-315. https://doi.org/10.1007/978-94-007-2926-1_8 DOI: https://doi.org/10.1007/978-94-007-2926-1_8
Cressey, D.R., (1953), Other People’s Money: A study in the Social Psychology of Embezzlement, New York, NY: The Free Press.
Dorminey, J., Fleming, S., Kranacher, M. and Riley, R. (2012), The evolution of fraud theory, Issues in Accounting Education, Vol. 27 No. 2, pp. 555-579. https://doi.org/10.2308/iace-50131 DOI: https://doi.org/10.2308/iace-50131
Fisher, Kelly. (2015). The Psychology of Fraud: What Motivates Fraudsters to Commit Crime? The Psychology of Fraud.School of Management. Women’s University Graduate. Texas. https://doi.org/10.2139/ssrn.2596825 DOI: https://doi.org/10.2139/ssrn.2596825
Ghozali, I., Achmad, T., & Pamungkas, I. D. (2019). Determinants of fraudulent financial reporting and whistle blowing system: Applying theory of planned behavior. WSEAS Transactions on Business and Economics, 16, 393–402.
Ghozali, Imam. (2014). Model Persamaan Struktural Konsepdan Aplikasidengan Program AMOS 22.0. Semarang: Badan Penerbit Universitas Diponegoro.
Gino, F., Ayal, S. & Ariely, D., (2009). Contagion and differentiation in unethical behavior: The effect of one bad apple on the barrel. Psychological Science, 20(3), pp.393–398. https://doi.org/10.1111/j.1467-9280.2009.02306.x DOI: https://doi.org/10.1111/j.1467-9280.2009.02306.x
Hasnan, S., Rahman, R.A. & Mahenthiran, S., (2013). Management Motive, Weak Governance, Earnings Management, and Fraudulent Financial Reporting: Malaysian Evidence. Journal of International Accounting Research, 12(1), pp.1–27. https://doi.org/10.2308/jiar-50353 DOI: https://doi.org/10.2308/jiar-50353
Jones, T.M. & Ryan, L.V. (1997). The link between ethical judgment and action in organizations: A moral approbation approach. Organization Science, 8(6): 663-680. https://doi.org/10.1287/orsc.8.6.663 DOI: https://doi.org/10.1287/orsc.8.6.663
Karim, Z. A., Said, J., & Bakri, H. H. M. (2015). An Exploratory Study on the Possibility of Asset misappropriation among Royal Malaysian Police Officials. Procedia Economics and Finance, 31(15), 625–631. https://doi.org/10.1016/S2212-5671(15)01150-8 DOI: https://doi.org/10.1016/S2212-5671(15)01150-8
Kassem, R. & Higson, A. W. (2012). The new fraud triangle model. Journal of Emerging Trends in Economics and Management Sciences, 3 (3), pp. 191-195.
Kenyon, W. and Tilton, P. D. (2006). Potential red flags and fraud detection techniques: A Guide to Forensic Accounting Investigation, First Edition, John Wiley & Sons, Inc, New Jersey.
Kline, R. B. (2011). Principles and Practice of Structural Equation Modeling (D. A. Kenny & T. D. Little Eds. Third ed.). New York, London: The Guilford Press: A Division of Guilford Publications, Inc.
KPMG(2013).The KPMG Integrity Survey 2013.http://www.kpmg.org (accessed 30 Juni 2016).
Krambia-Kapardis. (2016). A Holistic Model of Corruption and Corporate Fraud Prevention. In Corporate Fraud and Corruption (pp. 135–168). https://doi.org/10.1057/9781137406439_6 DOI: https://doi.org/10.1057/9781137406439_6
Kranacher, M., Riley, R., Wells, J. (2011). Forensic accounting and fraud examination. Hoboken, NJ: John Wiley & Sons, Inc.
Majid. R. April, (2010). An Exploratory Study on the Possibility of Misappropriation of Asset Occurring in a Local Authority: A Case of Shah Alam City Council. Dissertation. Universiti Teknologi MARA Campos,2010. https://doi.org/10.1109/CSSR.2010.5773802 DOI: https://doi.org/10.1109/CSSR.2010.5773802
Majid, R. A., Mohamed, N., Haron, R., Omar, N. B., & Jomitin, B. 2014. Misappropriation of Assets in Local Authorities: A Challenge to Good Governance. Procedia - Social and Behavioral Sciences, 164(September 2016), 345–350. https://doi.org/10.1016/j.sbspro.2014.11.086 DOI: https://doi.org/10.1016/j.sbspro.2014.11.086
Murphy, P. and Dacin, M.T. (2012), Psychological pathways to fraud: understanding and preventing fraud in organizations, Journal of Business Ethics, Vol. 101 No. 4, pp. 601-618. https://doi.org/10.1007/s10551-011-0741-0 DOI: https://doi.org/10.1007/s10551-011-0741-0
Nugraha, G. P., Subroto, B., & Rahman, A. F. 2013. Peran pendekatan antar disiplin terhadap penilaian risiko penyalahgunaan aset. Jurnal Akuntansi Multiparadigma, 4(2), 238–256. https://doi.org/10.18202/jamal. 2013.08.7195 DOI: https://doi.org/10.18202/jamal
Prayatna, A.P. & Fitriany, (2014). Fraud Triangle (Pressure, Opportunity, and Rationalization) and The Level of Accounting Irregularities in Indonesia. National Accounting Conference.
PWC (2016). Global Economic Crime Survey. http://www.pwc.org (accessed 30 Juni 2016).
PWC (2018). Global Economic Crime and Fraud Survey. http://www.pwc.org (accessed 30 April 2019).
Rae and Subramaniam. (2008). Quality Of Internal Control Procedures Antecedents And Moderating Effect On Organisational Justice And Employee Fraud. Managerial Auditing Journal Vol. 23 No. 2, 2008 pp. 104-124. https://doi.org/10.1108/02686900810839820 DOI: https://doi.org/10.1108/02686900810839820
Ramamoorti, S. (2008). The psychology and sociology of fraud: Integrating the behavioral sciences component into fraud and forensic accounting curricula. Issues in Accounting Education, 23, (4). Retrieved from http://jthomasniu.org/class/781/Readings/psychoffraud.pdf DOI: https://doi.org/10.2308/iace.2008.23.4.521
Raval, Vasant(2015). A Disposition-Based Fraud Model: Theoretical Integration and Research. Agenda (email@example.com) Heider College of Business. Creighton University. https://doi.org/10.2308/i ce.2008.23.4.521
Robin, S.P., dan Judge, T.A.2007. Organizational Behavior, Pearson Educations, 12thEd.
Singleton, T, and Aaron J. (2010). Fraud Auditing and Forensic Accounting, Third Edition. John Wiley & Sons, Inc., New Jersey. https://doi.org/10.1002/9781118269183 DOI: https://doi.org/10.1002/9781118269183
Sitorus, Tumpal Sitorus. Scott, Don Emeritus. (2008). The Roles Of Collusion, Organisational Orientation, Justice Avoidance, And Rationalisation On Commission Of Fraud: A Model-Based Test. Review of Business Research, Vol. 8, No.1, pp. 132-147.
Solimun (2010). Analisis Multivariat Pemodelan Struktural Metode Partial Least Square- PLS. Penerbit CV. Citra: Malang.
Wells, J. T. (2005).Principles of Fraud Examination, New Jersey: John Wiley & Sons, Inc.
Wells, J. T. (2007). Corporate Fraud Handbook: Prevention and Detection (2nd Ed.) New Jersey: John Wiley & Sons, Inc.
Wells, J.T. (2004). Occupational Fraud and Abuse, Obsidian Publishing, Austin, Texas.
Wright, C. J., Johnson, C. B. & Dorr, P. B. 2006, Employee recognition and assessment of fraud schemes: An international perspective, Petroleum Accounting and Financial Management Journal, Vol. 25, No. 1, pp. 17-40.
Zimbelman, Mark F. Albrecht, Conan C. Albrecht, W. Steve. Albrecht, Chad O. (2014). Akuntansi Forensik. Jilid 1. Edisi 4. Penerbit Salemba Empat. Jakarta.