The fraud diamond: empirical evidence in the external demand reports of the Ministry of Transparency and General Comptroller of the Union (CGU) of brazilian municipalities
DOI:
https://doi.org/10.21680/2176-9036.2020v12n2ID18732Keywords:
Audit. Fraud. External Demand Reports. The Fraud Diamond.Abstract
Purpose: This study aims to identify the evidence of irregularities found by the auditors and the justifications expressed by the manager as the following factors: opportunity, pressure, rationalization and capacity. Additionally, analyze or profile the characteristics found according to geographical and population characteristics of the Brazilian Municipalities audited by the CGU.
Methodology: The interpretation of the content of the external demand reports was based on the content analysis technique and the data analysis was performed based on descriptive statistics, using a sample of 259 reports out of an initial total of 725 reports. The CGU External Demand reports were chosen because of their content to collect information regarding the four constructs proposed in the Fraud Diamond.
Results: The findings allowed us to observe the presence of the four factors of the fraud diamond conceptual framework in the auditors 'findings and managers' justifications, presented in the CGU reports. Thus, the results indicate that the Triangle and Diamond Theories of Fraud may explain the occurrence of fraudulent acts by Brazilian municipal managers. Another finding, the frequency of the opportunities was significant for managers to commit fraudulent acts, due to monitoring failures or internal control systems. The ability element was also frequent in the study findings, demonstrating that the position held by the individual may be a factor associated with the occurrence of irregularities. The frequency of the rationalization and pressure categories was lower. The category of rationalization was observed mainly in the moral justifications presented by the managers.
Contributions of the Study: These indicators may reveal possible actions of ineffectiveness, inefficiency, social ineffectiveness, political risk, moral hazard, and investment risk in the application of program resources.
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