Guest editorial

Citation

Luo, X.(R). (2012), "Guest editorial", International Journal of Accounting & Information Management, Vol. 20 No. 4. https://doi.org/10.1108/ijaim.2012.36620daa.001

Guest editorial

Article Type: Guest editorial From: International Journal of Accounting and Information Management, Volume 20, Issue 4

Before introducing this special issue, we – as its guest editors – would like to express our gratitude to the Editor-in-Chief of IJAIM, Professor Lee J Yao. He is the one who stimulated us to enrich the research on fraud by including multidisciplinary studies that use various research methods. He also helped us with the collection of papers and the organization of the review process. Furthermore, we would like to thank the authors of the papers in this special issue for endeavoring to help the general public audience to better understand fraud and investigation.

Fraud, as an intentional deception made for personal gain or to damage another individual, has been an important topic affecting businesses. It stems from different forms and has cost the society enormous amount of money during the past decades, thus leading to an immense concern by the general public around the globe. Individuals, organizations, industries and regulators have tried hard to fight against fraud. Academia has also contributed to this arena by conducting scientific studies to help the general public better understand fraud and identify more effective ways to prevent, remedy and detect fraud. This special issue includes five papers, which reflect researchers’ attempts to deal with the state-of-the-art information fraud/security and investigation in relation to accounting, information systems/management and financial reporting.

The first paper by Chew and Robinson describes an interesting and effective approach to reconcile accounts in order to strengthen the internal control of an organization, which is a key to fight against fraud. The approach, data mining algorithms, is built on techniques from data mining, informatics and statistics. It can automatically extract the most pertinent key words from each transaction/account description and then match pairs of transactions/accounts efficiently and accurately. The authors apply the approach to an actual reconciliation project and provide empirical results to suggest that firms that adopt data mining algorithms can gain advantages over nonadopters.

Although an organization can have a strong internal control system in place, there aresocial engineers who may attack the organization by ways that circumvent the system. Specifically, social engineers may trick employees of an organization to perform actions or divulge confidential information so that they will gain access to privileged information, steal from a company, or break into a system (i.e. building, computer, etc.). In response to the concern of this kind of fraud, the second paper by Brody et al. describes different social engineering techniques and explains how they work. Such a pragmatic discussion can build awareness of social engineering attacks, and consequently help to protect an individual, a company, or a computer system from fraud.

The third paper by Guo and Xu provides a descriptive case analysis on the frauds at a company, named Alibaba, in online B2B platforms of China. Through the analysis of this practical case, the authors address motivations and opportunities for committing frauds in several aspects of B2B platforms. More importantly, the authors suggest remedial measures that have yielded initial promising results.

Industry regulators try their ways to fight against fraud in online B2B platforms as well. For example, American Institute of Certified Public Accountants (AICPA) and the Canadian Institute of Chartered Accountants (CICA), the accounting industry regulators, try to fight against fraud by developing some assurance services (e.g. SysTrust and WebTrust), in which professionals like Certified Public Accountants (CPAs) will check whether an organization’s system in B2B platforms meets the principles of security, availability and processing integrity. The paper by Greenberg et al. examines the effectiveness of such an assurance service. By giving potential users with with an online accounting system, this paper finds that the assurance service, SysTrust, measures the system reliability as potential users perceive and influences these users’ intention to adopt the online system.

The final paper by Khanin and Mahto focuses more on fraud detection by examining the relationship between companies’ underlying attitudes toward regulatory risk and their slack accumulation strategies. This empirical study classifies companies that did not restate their prior financial statements as regulatory risk-averse companies, companies that made voluntary restatements as risk-neutral companies and companies that were forced to restate as risk-seeking companies. The authors find that the three types of companies differ in their strategies of employing available slack (amass liquid resources), recoverable slack (invest in firm infrastructure and human resources as well as working capital) and potential slack (use the ability to raise capital influenced by existing debt obligations, credit ratings and other indicators such as Altman’s z score to full extent or rather sparingly). Such a finding suggests that the general public may detect frauds early on by examining companies’ slack accumulation strategies.

Overall, we believe that the collection of papers in this special issue is an interesting one, as each paper adopts different research methodological approach (e.g. conceptual research, case study, survey, archival study) and examines the issues on fraud from its own perspective. We hope that this rich variety will contribute to the further discussion of these themes and may appeal to the IJAIM audience.

Xin (Robert) Luo, Stephen BurdGuest Editors