1. RAC 700
Research Methodology in Accounting
Fraudulent Financial Reporting And Company
Characteristics : Tax Audit Evidence
Theoretical Framework
14th October 2011
Nor Azam Bin Yaacob 2010326983
Ahmad Zaki Bin Abd Rahim 2011238252
Mohd Faisal Bin Md Yusof 2011604464
2. Broad To examine the relationship between fraudulent financial
Objective reporting and firm characteristics
Sub Objective
Size To investigate the relationship between company size and
fraudulent financial reporting
Owner To identified the relationship between the type of control of the
company and fraudulent financial reporting
Audit To Examine the relationship between the size of audit firm and
fraudulent financial reporting
3. Theoretical framework
Control Variables
Manufacture Commercial
Ind. Ind.
COMPANY Agriculture Services
Ind.
SIZE Ind.
Construction Real Estate
Ind. Ind.
OWNER
MISTATE
AMOUNT
AUDIT
QUALITY Dependent Variables
Independent Variables
4. Variables Description Designation
INDEPENDENT
Audit Quality Split into AUDITi
a)Big Auditor (1);
b)Small Auditor (0)
Company Size 5 size according to Sales: SIZEi
<500 K = 1
<1Mil = 2
<10Mil = 3 (adjusted using natural log of
<100 Mil = 4 company Sales)
>100 Mil =5
Degree of Control Based on IRB report and OWNERi
Financial Statements
(Non Controlled = 0
Control = 1)
DEPENDENT Total Misstatement Amount MISSTATE_AMOUNT
Comprise of 7 categories :
Sales, Purchase, Stocks,
Expenses, Allowance, Transfer
Pricing and others
CONTROL Divided into 5 industries MANi =Manufacturing
COMCi = Commercial
AGRIi = Agricultural
SERVICEi = Service
CONSTRUCi = Construction R
ESTATE = Real Estate
