17/07/2020

Aplikasi Behavioral Forensics

dalam Audit Forensik
Hendi Yogi Prabowo, Ph.D, CFrA, CAMS
Centre for Forensic Accounting Studies UII
Seminar Online
Repositioning Traditional Audit, Fraud Audit, dan
Forensik Audit dalam Konteks Akuntabilitas

21 Juli 2020

Short CV
• Name: Hendi Yogi Prabowo
• Occupation :
– Director of the Centre for Forensic Accounting Studies UII
– Lecturer at the Islamic University of Indonesia (UII) Yogyakarta
• Professional Certification
– Certified Forensic Auditor (CFrA) – Indonesia
– Certified Anti-Money Laundering Specialist (CAMS) – USA
• Education
– Bachelor of Economics (Accounting) – Islamic University of Indonesia
– Master of Forensic Accounting – University of Wollongong Australia
– Doctor of Philosophy (Forensic Accounting) –University of Wollongong
Australia

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Forensic Accounting

Definition

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Definition
• Forensic and investigative accounting is the
application of financial skills and an investigative
mentality to unresolved issues, conducted within the
context of the rules of evidence. As a discipline, it
encompasses financial expertise, fraud knowledge,
and a strong knowledge and understanding of
business reality and the workings of the legal system
(Bologna & Lindquist, 1987).

Historical Facts
• According to D. Larry Crumbley (Louisiana State
University)
The scribes of ancient Egypt who inventoried the
pharaohs’ grain, gold, and other assets were the
predecessors to today’s accountant. Asset control and
fraud prevention and detection were the accountant’s
main duty until the turn of the 20th century. Then as
accrual basis accounting became common, reporting
issues became a top priority.

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Fraud

Fraud Tree

Source: ACFE

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Fraud Elements Triangle

Concealment

Money laundering

How?

Act Conversion

Fraud Triangle

Opportunity

Why?

Pressure Rationalization

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The Iceberg of Fraud Problems

Known Problems

Unknown Problems

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Behavioral Forensics

Behavioral Forensics

Behavioral forensics focuses on human

behavior, because the central fact behind all
fraud is the existence of one or more
individuals and their questionable,
egregious, unethical, or even illegal
behavior.

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Fraud from the Behavioral

Perspective
• The human mind is the most complex and powerful
“mechanism” on the face of the earth.
• In the human mind, the power exists to do good or
harm.
• An understanding of what motivates the fraudster alone
or in collusion with others inside or outside the
organization, can go a long way in identifying the
behavioral risk factors that may indicate fraud.

Schemata

Unconscious mental structures, that represent an individual's

generic knowledge about the world. It is through schemata
that old knowledge influences new information.
Frederick Bartlett
(1932)

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Schemata
• An individual can memorize and use a schema without even
realizing of doing so.
• Once a schema is developed, it tends to be stable over a long period
of time.
• Human mind uses schemata to organize, retrieve, and encode
chunks of important information.
• Schemata are accumulated over time and through different
experiences.
• Key theoretical development of schema theory was made in several
fields, including linguistics, anthropology, psychology and artificial
intelligence.

Schemata
Societal Schemata
(Culture)

Schemata
Organizational Individual Schemata
Schemata (Mindset)
(Organizational Culture)

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Culture represents a
“collective programming of
the mind’’

(Hofstede, 1980)

Case Study

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Toshiba Scandal

• On July 21, 2015, Toshiba’s CEO Hisao Tanaka

announced that he was resigning from the corporation
to take responsibility for his involvement in an
accounting scandal that caused Toshiba to overstate its
profits by approximately $1.2 billion USD.

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Toshiba Scandal

• The fraud resulted from of a top-down effort by Toshiba’s

employees to inflate the company’s net income.
• Top executives at Toshiba set almost impossible profit targets,
and pressured employees to meet those targets by any
means, including the fraudulent inflation of profits.
• A lack of internal controls, combined with a corporate culture
that demands strict obedience to management decisions,
resulted in a fraudulent inflation scheme spanning over a
seven-year period.

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Leadership Red Flags

• Authoritarian culture
• Narcissism
• Unrealistic expectations
• Wheeler dealer attitude
• Overemphasize on “harmony”
• Etc.

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Cultural Dimensions

Cultural Roots
• Japanese ideas of cultural harmony play a big role in
facilitating corporate misconduct.
• At its core, cultural harmony can be best described by the
Japanese proverb, “the nail that sticks out gets hammed
down,”—meaning that its better to follow the group than to
stand out
• Thus, “groupthink” dominates Japanese corporate culture.

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Cultural Roots
• The “groupthink” dominates Japanese corporate culture.
• Employees will use groupthink to rationalize the validity of
impermissible acts by concluding that other employees exhibit
the same behavior.
• Under such cultural norms, widespread corporate fraud is
easily achievable and oftentimes goes unnoticed.

Japan’s Corporate Culture

• Japanese people start working in a company right after their
graduation from university or high school; they continue to
work in the same company until retirement.
• There is relatively little mobility in the sense that workers
change employers.
• This long commitment to the same company requires that
employees maintain healthy interpersonal relationships and
refrain from any action that goes against the interest of the
company or the wish of their superiors.

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Japan’s Corporate Culture

• Although such things as whistle-blowing and union
protections of workers’ interests exist at a formal level, cases
where workers expose corruption and unethical behavior are
very rare.
• Lifetime workers in traditional Japanese companies join a
community of fate where each person feels a greater loyalty
to the company than to society.

Cultural Dimensions

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High Power Distance

• Hierarchy is important
• Subordinates expect to be told what to
do
• Tone at the top strongly influences
organizational culture and behavior

Jabatan Pelaku Fraud

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Kelemahan Pengendalian

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High Collectivism
• "We" –consciousness
• Harmony should always be
maintained
• Others classified as in-group or
out-group
• Opinions and votes predetermined
by in-group
• Relationship prevails over task

Jumlah Pelaku Fraud

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Offenders’ Personal traits

and Capability

Source: Global Profiles of a Fraudster, KPMG International, 2013

Pelaku Fraud

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• Criminal behavior is learned from

other individuals.
Differential Association Theory
• Criminal behavior is learned in
interaction with other persons in a
process of communication.
• The principle part of the learning of
criminal behavior occurs within
intimate personal groups.
• When criminal behavior is learned,
the learning includes (a) techniques
of committing the crime, which are
sometimes very complicated,
sometimes simple; (b) the specific
direction of motives, drives,
rationalizations, and attitudes.

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Materialism

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Individuals in high
power distance cultures
are very aware of
wealth and its relation
to freedom, power, and
respect.

They thus show higher

levels of materialism
than those in a low
power distance culture.

5%

95%

Organizational
Knowledge

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You must unlearn what you have learned

Organizational Unlearning
• Organizational unlearning is the process of
acknowledging and releasing past knowledge to
accommodate the adoption of new knowledge for
improving an organization.
• Organizational unlearning is essential in preparing an
organization for new opportunities and innovation
by allowing the adoption new information or even
new behavior.

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Fraudulent
Organization

Discernment
Organizational
Organizational
Unlearning Unlearning and
Organizational Re-learning
Re-learning

Accountable
Organization

Discernment
• A personal growth process involving receptivity, recognition
and grieving activities which requires active dialogue not only
with other people with knowledge and wisdom but also with
the self at the time of vulnerability (Boyd and Myers,1988)

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Guilt

• Ausubel (1955, p. 379) defined guilt as:

…a special kind of negative self-evaluation which occurs when an
individual acknowledges that his behavior is at variance with a given
moral value to which he feels obligated to conform.

Shame
• Shame according to Collins and Bahar (2000, pp. 35–36) is an
internalized representation of cultural demands on an
individual and thus it may serve as a powerful regulators of
human behavior.

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