King's Own Institute: Accounting Fraud Prevention in Australia Report

This report, titled "Accounting fraud prevention in Australia," investigates the challenges of preventing accounting fraud within Australian organizations. The research, conducted for the BUS707 Applied Business Research course, explores the prevalence of fraud, its intentional and unintentional nature, and the importance of robust prevention measures. The study incorporates a literature review, utilizing secondary sources to understand the existing research and practices in fraud prevention. The methodology involves a qualitative research approach, potentially including interviews and a review of existing literature, to gather theoretical data. The report covers the research problem, aims, and objectives, and the proposed structure of the research. It addresses the significance of ethical considerations and statistical data analysis. Key areas include the importance of maintaining integrity, confidentiality, and adherence to accounting standards. The literature review references several sources, including Suyanto (2016), Modugu and Anyaduba (2013), and Cockcroft and Russell (2018), to explore fraud detection methods, the role of forensic accounting, agency conflicts, and the impact of accounting errors. The report highlights the role of the board of directors and audit committees in overseeing financial reporting and preventing fraud. Furthermore, it emphasizes the importance of employment screening as a first line of defense against fraud, referencing Australian standards and the cost-effectiveness of thorough screening processes. The report aims to provide a comprehensive understanding of accounting fraud prevention strategies in the Australian context.

Running head: APPLIED BUSINESS RESEARCH
Accounting fraud prevention in Australia

APPLIED BUSINESS RESEARCH 2
Abstract
The aim of this report is to assess accounting fraud prevention in Australia. This investigation
illustrates that a company faces accounting fraud issues highly in Australia. This fraud can occur
intentionally or unintentionally. This investigation aids in declining accounting fraud concerns.
Introduction, literature review as well as, research methodology are part of research methodology
that would be appliedto systematically complete the research practices. Research problem, aim
and objectives, as well as proposal structured, would be discussed in this research. Secondary
sources would be used in a literature review for addressing prevention regarding accounting
failure in Australia.
In third chapter, i.e. research methodology, qualitative research approach would be applied in
order to obtaining the theoretical data related to research concerns. In this investigation, both
primary data collection technique as well as secondary data collection technique would be
entailed such as interview and literature review. Statistical data analysis will be used for
analysing information in significant manner. Along with this, ethical consideration would be
used in relation to conducting investigation in an ethical manner.

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Table of Contents
Abstract ........................................................................................................................................... 2
Introduction to the research .......................................................................................................... 4
Introduce the topic of the research................................................................................................ 4
What real problem does the research seek to resolve and why is it important to researchthis
topic (project scope) ....................................................................................................................... 5
Outline the structure of this proposal............................................................................................ 5
Introduction.................................................................................................................................... 6
Literature review ............................................................................................................................ 6
Research methodology ................................................................................................................... 6
Research problem and research objectives ................................................................................... 6
Theoretical Background/Literature review ................................................................................... 7
Research Design and Methodology ............................................................................................. 12
Type of research (exploratory, descriptive, causal) .................................................................... 13
Research approach (quantitative, qualitative or mixed approach) ............................................ 13
Type of data will be used (primary or secondary data) ............................................................... 14
Data collection.............................................................................................................................. 14
Sampling ....................................................................................................................................... 15
Data analysis ................................................................................................................................ 15
Ethical consideration ................................................................................................................... 15
References .................................................................................................................................... 17
Appendix ....................................................................................................................................... 20

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Introduction to the research
Introduce the topic of the research
There have been several fallacious practices in practices of accounting. Moreover, some
guidelines as well as, accounting rehearses are developed for eliminating each one of those
concerns but, these issues are persistent. In addition, principal concerns within the Australian
market is linked to straightforwardness record, as well as, exchange of money to put away
authentic compensation as well as, unfit to stay aware about the current upgradation in the
mechanical system (Shore, 2018).
The key motivation behind this research is to differentiate the illustration for the prevalence
related to such experiences as well as, addresses the measures for controlling it. Moreover, in
order to maintain correct accounting practices in, organisation should take into consideration
some aspects that maintain morals in accounting. Moreover, uprightness is initial thing that
basically intended for maintaining uprightness (Prenzler, 2017).
The bookkeeping structure should consider morality as well as, straightforward in single
exchanges. All accounting data should be confidential and fundamental. It should maintain
secrecy regarding accounting practices. Accountant faces issue related to timing and distribution
of bookkeeping record. However, there should be secrecy regarding the exchange of concerned
parties. In addition, the accounting structure should mirror the conducted expert (Iyer and
Samociuk, 2016).
There are several standard as well as, guidelines in the relation to accounting and it is indicated
through which, exercises are restricted inside as well as, bookkeeping is identical. In addition to
this, accounting exercises that are recorded as well as, prepared should be in accordance with the
standard that are developed bythe company. Moreover, in this separated structure, different

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things should be entailed as well as, moral equalization should be maintained in bookkeeping
activities. In such event, moral practices could be dropped back through relation with complete
fairness as well as genuineness as compared to, deceptive exercises would not occur (Capezio,
and Mavisakalyan, 2016).
Client organization
This investigation relies on accounting system of one of company in genial reception sector that
focuses on Sydney, Australia. In existing times, 148 employees who are working for association,
and company has annually overturned about a hundred as well as, twelve million dollars.
Companies incorporate system of international financial reporting standard (IFRS) to maintain
records of accounting. It supplies its client to significant conveniences, a strong assurance as well
as, services to its customer. Company is intended in a monopoly market and high challengers
into market. Thus, total revenue of company can be created via its several loyal customers
(Andon, et. al., 2015).
Real problem of research and its importance to research this topic
There is a problem related to accounting fraud problem. In an organization, several types of
accounting fraud could be conducted intentionally or unintentionally. This research supports to
comprehend prevention of accounting failure within an organization. This project has a wider
scope for accountants to gain their understanding of the prevention policies for accounting fraud
in Australia. It would have also wider scope for an academician to create their understanding
regarding issues of accounting failure as well as develops their knowledge about the solution of
accounting failure (Kummer, Singh, and Best, 2015).
Outline structure of proposal

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The organization structure related with proposal will be advantageous for an investigator in order
to create a feasible judgment as well as, comprehends the elements that will be entailed with the
purpose of this research. These elements are introduction, literature review, and research
methodology (Van Akkeren, and Buckby, 2017). It can be discussed as given below:
Introduction
Under the introduction part, different elements are consideredfor completing the research like
research problem, aim with objectives, organizational structure, as well as, research scope. It can
be beneficial for completion of research within targeted cost as well as time (Mansor, 2015).
Literature review
In such part, an investigator would be competent for gaining the theoretical knowledge of
research concerns. It can be beneficial in order to attaining targeted aim in less time.
Furthermore, literature review would be considered by using several sources like online
publication, academic publication, textbooks, journal articles, as well as, offline sources. It can
be beneficial to collect the theoretical data associated with research issues. These sources can be
beneficial for obtaining a positive result in terms of existing research issues (Aris, et. al., 2017).
Research methodology
Under this research methodology chapter, several approaches, and techniques as well as,
strategies will be used that supports research concerns. These tools are data gathering method,
research strategies, research type, sample, and research approach. It can be beneficial for
achieving the research practices via selecting the significant mode for completion of research
(Prenzler, 2016).
Research problem and research objectives
The key problem of this investigation is to address accounting fraud prevention in Australia.

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Furthermore, prevention as well as, controlling of fraud are highly challenging for Australia in
current times as well as, in the upcoming year. Success in dealing with fraud would improve the
business reputation of Australia, save resources in public fields, as well as, declines the personal
hardship that can cause fraud to countless victims in each year (Kapardis, and Krambia-
Kapardis, 2016).
Research Aim and Objectives:
There is two aim of research like the primary as well as, secondary aim of the investigation. In
addition, primary aim of this investigation is to assess ways for preventing deception as well as, a
secondary aim is to implement efficient tools to prevent fraud in Australia.
The key objectives for this investigation is listed as follow:
 To discover existing element related to prevention technique as well as fraud created
through several association within Australia
 To assess familiarities about accounting approaches between professionals within
Australia
 To observe system for preventing fraud as well as measurement related to validity
Theoretical Background/Literature review
As per the view of Suyanto (2016), the investors are considered as moderators in which, cluster
sampling is practiced for gathering the information from 73 corporations. Along with this,
companies reveal financial data in order to drive the volume of stock s as it increases the trust of
investors and the public. Hence, it is significant to demonstrate the financial statement i.e. free
from misstatements, frauds as well as, irregularities. Along with this, frauds in the context of
financial statements could be initiated by manager and it can affect the earnings. It could be
demonstrated as non-material however, outcomes in gigantic fraud. This investigation

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incorporates IT, accounting reporting as well as, dividend policy as an independent variable.
Together with, shareholders are moderators in terms of measuring the effects on prevention of
dependent variable fraud.
In contrast to this, Modugu and Anyaduba (2013) stated that there is a significant gain in up -
surging in relation to financial accounting fraud that has developed forensic accounting more
interesting theme It is evaluated that forensic accounting is key practice related to the
investigation, utilization as well as, accounting practices for increasing the transparency within
legal issues. Moreover, forensic accounting contains the model that investigates in the context of
advisory perspective, attestation, as well as, assurance, which supports in creating the legal
evidence. It is also evaluated that fraud is the consequence of forensic accounting as it contains
property acquisition.
As per the view of Yazid and Suryanto (2017), the auditor should be competent to enhance their
competency level while auditing report practicing the international reporting standards. Agency
conflict is addressed as a key concern in the prevention of fraud because the separation related to
conflicts declines whole efficiency of procedure related to fraud prevention. Along with this,
concentrated ownership can be an effective method for developing stronger control as well as,
the previous investigation has demonstrated that agency conflicts can unfavorably affect fraud
prevention policies.
On the other side, Cockcroft and Russell (2018) evaluated that there is biased in the aspect of
reporting as well as, imperfect accounting. Moreover, errors and bias are two inherent features
related to accounting. In such a way, errors indicate the discouraging bias as it declines the worth
as well as, application of accounting. However, it could be practiced as camouflage for creating
frauds and misstatements in accounting practices. It is addressed that the major implication

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related to errors in reporting that they shape the companies incentive in terms of biases and
fraud. Accounting errors as well as frauds decline the worth of accounting data to the public as
well as, investors. This research has developed the (Fisher and verecchia) FV’s theoretical
structure as well as, aim to addresses the disguise impact related to accounting errors and bias.
This model demonstrates that managers select optimal bias as well as, developing objective
function in terms of capturing the benefits of biasing for managers.
As per the view of Sadaf et al. (2018), an accountant should oversight by the board as well as,
committees. The board is accountable to manage the internal control on financial reporting
developed by process as well as management through which, management can satisfy itself that
those controls are performing significantly. The board is accountable to evaluate the uncertainty
of financial fraud through management as well as makes sure controls are in place for
prevention, detecting as well as deterring the fraud through management. There is a higher
amount of oversight of board, which could be embedded in other components of significant anti-
fraud initiatives. The board of director of an organization as well as the audit committee
significantly affect the controlled atmosphere as well as tone at the top. They should be free from
management’s influences. It is critical that the audit committee along with board
methodologically and periodically reviewing the control of management in over the financial
reporting with other operation. It is also critical that such accountabilities for oversight could be
reflected in their specific charters.
In contrast to this,Halbouni Obeid and Garbou (2016) evaluated that employment screening
should be used by the company for preventing accounting practices. It is addressed that there are
about 71.4% of all fraud was created through internal perpetrators. In addition to this,
employment screening is the first line of defense against the fraud as well as, in the last few

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years, several companies have focused on its significance. Consequently, pre-employment
screening can be considered in Australian standard as per the corruption and fraud control AS
8001-2003. This transformation in thinking is the outcome of circumstances like publicity
concerning companies who have unintentionally employed criminals in sensitive positions or
security. In several years, different cases from individual experience entailing candidates with
false requirements.
According to Samociuk and Iyer (2017), in current times, different cases have been publicized
that effectively depicts that feasible screening of employees cannot be a luxury alternative.
Moreover. Disaster can have been avoided while feasible screening of employment has been
applied. There is evidence that cost related to feasible screening can be far overweighted through
the expenses of cost of one terrible recruit. In order to decline the experience for preventable
fraudulent practice, a company should have clearly demonstrated the pre-employment standards
that must be satisfied.
On the other side,Popoola et al. (2016) evaluated that a company should keep internal control
that can avoid or eliminate the fraud. It involves the restricting access for certain elements such
as inventory access, overtime, multi-person sign-off related to compensation of expenses, all
check writing activities other accounting or payroll activities, as well as, performing the
overview related to audit logs for making sure the truthfulness of books.
As per the view ofNawawi and Salin (2018), the company should examine business bank
accounts. Moreover, with online banking alternatives, it is simple for viewing the accounting
practice and statement when it is easy. In addition to this, a business manager can perform this
regularly in order to ensure that there would be no manipulation in the paper-based statement of
offices. The primary item i.e. search for are unavailable together with, out of order assessments,

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unfamiliar recipients of payment as well as, checks that could be signed in over the third party as
compared to deposited in the account of the business. Moreover, staff should comprehend that
assessing check practice can be a key element regarding accounting review procedure that can
support to avoid the fraud.
In opposed to this,SuleYusofand Bahador (2019) evaluated that company can routinely audit
sectors, which deal with product returns, refunds, cash, accounting functions, as well as,
inventory management. Moreover, occasional non-scheduled audit can support in detecting the
fraud with high risk and with critical business sectors. Moreover, ACFE provides the fraud
prevention assessment in order to support business for addressing the fraud risk as well as creates
the measures for preventing losses.
As per the view ofFlynn (2016), the company should train the workforces for preventing the
fraud. Workforces in fraud-probe sectors of business should have awareness about the warning
signs related to fraud, prevention competencies as well as ways for reporting the suspicious
attitude made by customers and co-workers. The company can develop anonymous reporting
practices because it set the mind effectively with respect to letting the managers understand
about fellow staffs. The management such as, owner of the company develops the ethical code
that makes clear unethical attitude would not be accepted by an organization.
On the other side, Ehioghiren and Atu (2016) stated that company could protect data of credit
card. Furthermore, the company should separate the personal account with a business even, in
the case of, smallest home-based practices. Integration related to business funds to personal
finances cannot be prone for high-cost faults. However, it can demonstrate that an employee can
lost funds while credit card data are violated. In addition to this, separating accounts creates
easier tracking business costs. Companies can be worried about whom they offer their credit card

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data as well as, can practice secure as well as, online bill payment facilities while feasible.
Moreover, company should eliminate the potential to check theft and fraud.
In support of this, KrambiaKapardis and Papastergiou (2016) stated that one of the key factors is
effective internal control practice is segregation of responsibilities. Management supports in
preventing fraud by declining the incentive of fraud. The primary benefit and opportunity are to
decline the committed fraud while functionsof accounting are separated at the workplace. The
activities related to segregating responsibilities may separate the authorization, recordkeeping as
well as reviewing the function in accounting procedure. The activity of categorizing
responsibilities separates the authorization, review function as well as for recordkeeping from
accounting procedure. In order to categorize responsibility, the company should entail more than
one individual in the preparation procedure of the financial statement. Hence, fraud created by
two individuals can conspire to commit the crime.
According toJohansson and Carey (2016), the company should develop a strong control
atmosphere. It entails enlisting management to depict ethical conduct. It is identified that set
strategies by management can trickle down impact on workforces of corporations. All
compliance and regulation should be set in the written form. The strategies should be concise as
well as involve the consequences while processes are disobeyed by employees. As per the
ACFE’s Fraud Examiners Manual, one of effective mode is to develop a strong moral tone for
the company is to hire ethically sound workforces.
On the other hand, Krambia-Kapardis (2016) illustrated that the company should get the
assistance of an expert. Business can execute the step of fraud prevention, as there are larger
legal implications. The company should also recruit a professional accountant in order to
perform extensive reviews as well as an audit of control procedures and business books. CPAs,