DETECTING FINANCIAL STATEMENT FRAUD THROUGH THE FRAUD HEXAGON MODEL: A LITERATURE REVIEW OF ITS APPLICATION AND MODERATING ROLE OF AUDIT COMMITTEES
Keywords:
financial statement fraud, fraud triangle, fraud hexagon, audit committee, Agency TheoryAbstract
Financial statement fraud, while statistically less frequent than other types of occupational fraud, causes the highest financial losses. This literature review synthesizes theoretical and empirical findings on the Fraud Hexagon model, which extends traditional fraud theories by incorporating six key elements: pressure, opportunity, rationalization, capability, arrogance, and collusion. The review also explores the moderating role of audit committees in mitigating these fraud risk factors, particularly in the context of state-owned enterprises. Findings reveal varied empirical support for each element and indicate that audit committees can moderate some, but not all fraud mechanisms. Research gaps are identified to guide future studies on fraud detection and governance effectiveness.References
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