The Anatomy of Management Fraud Schemes:

This study investigates the process of perpetration and concealment of management fraud in financial statements. First, we argue that fraud schemes consist of two components: “account schemes” and “evidence schemes.” Account schemes are the schemes through which management perpetrates fraud by manipulating account balances or disclosures. Evidence schemes are the schemes through which management creates (or hides) evidence to conceal fraud. For our analysis, we create taxonomies of the account schemes and evidence schemes and explore their relationships. The study finds several positive relationships between certain specific types of account schemes (i.e. fraud) and specific types of evidence schemes. Furthermore, evidence schemes are affected by client industry, type of auditors, and type of financial reports.