Can fraud triangle model predict fraudulent financial statements ? : evidence from Egypt

Abstract EN

Purpose – The aim of this study is to examine the risk factors of the fraud triangle model, the core of fraud auditing standards, to assessing probability of engaging in fraudulent financial statements.

Design/Method – Depending on logistic regression analysis, this study examined the impact of the elements of fraud triangle model on the detection of financial frauds in financial statements.

Significant variables, relating to pressure, opportunity and rationalization are investigated.

 Findings – this study found that fraud risk factors for pressure (financial leverage and sales to total assets), for opportunity (independence of audit committee), and for rationalization (total accruals) are significantly associated to the occurrence of fraudulent financial statements