Fraud

Fraud is a common phenomenon in business, and according to Section 24 of the Iranian Auditing Standards, it is the fraudulent act of one or more managers, employees, or third parties to derive unfair advantage and any intentional or unlawful conduct. Financial statements are a means of transmitting confidential management information about the financial position of a company to shareholders and other stakeholders. In this paper, by reviewing the literature, 6 indicators of current ratio, debt ratio, inventory turnover ratio, sales growth index, total asset turnover ratio, and capital return ratio as input and detection of financial fraud as output are considered for the fuzzy neural network. The database was compiled for 10 companies in the period from 2010 to 2018 after clearing and normalizing qualitatively between 1 to 5 discrete numbers with very low or very high meanings, respectively. The fuzzy neural network model with 161 nodes, 448 linear parameters, 36 nonlinear parameters, and 64 fuzzy laws with two methods of accuracy approximation of mean squared error and root mean squared error has been set to zero and 0.0000001 respectively. This neural network can be used for prediction.

Letter of Credit is an international payment instrument whereby the issuing bank undertakes to pay the beneficiary, against presentation of certain stipulated documents, according to the conditions of the Letter of Credit. Discounting of LC for the short-term financing of the seller, due to the independent and irrevocable undertaking of the bank to make payment, is prevalent. Beneficiary gets the amount of the credit immediately (after discount rate deduction) in consideration of the assignment of the credit in discounting practice. Now, the main question is: how will the assignment of rights and proceeds under the Letter of Credit be executable and what will be its consequences? Hence, by surveying different methods of assignment of rights in accordance with LC, we study discounting Acceptance and Deferred Payment LCs as two kinds of deferred LCs. In discounting practices of LCs, if a fraud being discovered after the discounting transaction but before the payment due date, the discounting bank would be able to recover payment from issuing bank or confirming bank. According to our analysis, the most promising way for the assignment of rights and reducing the risk of discounting for the discounting bank is "Negotiation" of LC. Acceptance LC makes a favorable opportunity for discounting purposes because it includes bill of exchange as a negotiable instrument, and there is an organized secondary market for Acceptances.

This scientific research aims to investigate the role of reinforcing or limiting the factors affecting fraud-based behavior in companies with opportunistic tendencies on companies' financial decisions. Opportunistic tendencies provide the context for directing many financial decisions to protect the interests of particular groups. On the other hand, the intervention of some internal and external factors limits the possibility of taking advantage of such opportunities or provides the conditions for their use. Studying the subject of fraud and its effects on financial management is crucial, notably with a systematic approach, implying this study's applied objective. Based on the provided comprehensive model, According to the comprehensive model, the present study is intended to explain the current situation in relation to the role and importance of three categories of trust factors, audit quality and political communication on the process of influencing fraudulent behavior on financial decisions such as profit management, risk management, capital structure and The ownership structure of companies has been discussed with the aim of controlling the effective factors in this field. This research is applied in terms of objective. It draws upon a descriptive and survey methodology. The statistical population contains managers, financial experts, and professionals from companies listed on Tehran Stock Exchange. A sample of 348 individuals was selected, and the collected data was analyzed using Structural Equation Modelling (SEM) and the PLS-Smart software package. Findings suggest that fraud significantly affects financial decisions, demonstrating the significant role of trust in mediating between fraud and financial decisions. The Sobel test confirms this role. The research also confirms that the mediating role of political relations and auditing quality in the relationship between fraud and financial decisions is significant in this model.

In the behavioral finance paradigm, investor sentiment can affect managers' behavior in financial reporting. Therefore, this study examines the relationship between investor sentiment and the likelihood of fraudulent financial reporting. Additionally, as risk disclosure may influence the relationship between investor sentiment and the likelihood of fraud, this paper investigates its moderating role. For this purpose, the data of 41 companies operating in the petroleum and petrochemical industries in Tehran Stock Exchange during the years 2013 to 2021 were used. The research models have been examined by logistic regression method. The results show that the likelihood of fraud is lower when investor sentiment is high. Furthermore, the study of the market's reaction to fraud shows that the market reaction to fraud announcements is less negative during high investor sentiment periods. In addition, the results demonstrated that risk disclosure moderates the relationship between investor sentiment and the likelihood of fraudulent financial reporting. It may be because, risk disclosure reduces the impact of investor sentiment on auditors' optimism by reducing information asymmetry between managers and investors. This leads to an increase in audit report clauses that confirm likelihood of fraudulent financial reporting.