The Influence of Internal Control, Financial Pressure, and Compensation Compatibility on the Tendency of Accounting Fraud

Experimental Study in Local Government Context

DOI

10.2991/aer.k.210121.015How to use a DOI?

Keywords

Internal Control, Financial Pressure, Compensation Compatibility, Fraud Accounting

Abstract

This research discusses the influence of internal control, financial pressure, and compensation compatibility on the tendency of accounting fraud. Two experiments were conducted to test the effect of these factors. Experiment 1 examined the influence of internal control and financial pressure on the tendency of accounting fraud. Experiment 2 scrutinized the effect of internal control and compensation compatibility on the tendency of accounting fraud. The samples in this study were 122 participants selected using a purposive sampling method. Analysis of Variance (ANOVA) was employed for the hypothesis built in this study. The test results in Experiment 1 revealed that individuals in conditions where there was no internal control tended to commit accounting fraud compared to those in conditions where there was an internal control. The test results also indicated that individuals in financial pressure conditions tended to commit accounting fraud compared to conditions with no internal control. This test’s results specified that there was no interaction between internal control and financial pressure on individual decisions in the tendency of accounting fraud. Besides, the test results in experiment 2 proved that individuals who received incompatible compensation were more likely to commit accounting fraud than those who received appropriate compensation. The test results also showed that individuals in the conditions of internal control absence and inappropriate compensation were more likely to commit accounting fraud than those in conditions with internal control. The further additional analysis results disclosed that internal control manipulation in experiment 2 has succeeded in replicating the experiment 1 results.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Ilham Maulana Saud
AU  - Lulu Diyar
AU  - Alfin Taufiqul Hakim
PY  - 2021
DA  - 2021/01/21
TI  - The Influence of Internal Control, Financial Pressure, and Compensation Compatibility on the Tendency of Accounting Fraud
BT  - Proceedings of the 4th International Conference on Sustainable Innovation 2020-Accounting and Management (ICoSIAMS 2020)
PB  - Atlantis Press
SP  - 98
EP  - 112
SN  - 2352-5428
UR  - https://doi.org/10.2991/aer.k.210121.015
DO  - 10.2991/aer.k.210121.015
ID  - Saud2021
ER  -