It is uncertain if adopting IFRS would encourage more fraud schemes, but using COSO based control framework can

mitigate the risk.

The adoption of IFRS brings more challenges and risks in terms of fraud. In reality, IFRS enhanced the neutrality and accounting quality of financial statement in emerging and developed economies. The overlay of IFRS and an advanced control framework would mitigate the risk of fraud.
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Principles-based approach places greater emphasis on interpretation and application of principles.

Assessment of the substance of transactions and evaluation of whether the accounting presentation reflects the economic reality is needed. This requires management to use judgment in presenting financial statements, which become a human element risk factor leading to a higher risk of financial statement fraud and misstatement. Greater use of fair value as a measurement basis placing emphasis on obtaining reliable measurements.
Cancino, F. (2009, December 7). Managing the Risk of Fraud in the Conversion to IFRS. Retrieved from http://southfloridaacfe.org/downloads/December_7_2009_Fraud_Symposium/managing_risk_of_fraud_in_ifrs.pdf

Accountants must be on the lookout for schemes to take advantage of timing differences.
The relative speed for companies to convert to IFRS can impact the quality of financial information. There is a risk of insufficient staffing, lack of oversight and inadequate training. Accounting and auditing personnel may be lack of IFRS experience. This slows down the process and affects the accuracy as well as reliability of the financial data.

Under IFRS, companies may be able to recognize revenue faster, minimize or delay mark-downs of assets.
Coenan, T. (2011, November 3). IFRS and Fraud: More Challenges, More Risks. Retrieved from http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2011/CorpFin/IFRSandFraudMoreChallengesMoreRisks.jsp

Management will have to take a judgment-based position on key differences between U.S. GAAP and IFRS.
Timing and proportion of revenue and expense recognition. Selection of asset impairment testing models that affect the timing of non-financial asset impairment. Development of fair market valuation of financial assets as opposed to recorded cost.

IFRS conversion changes regarding recognition, valuation, and classification expose companies to various financial statement fraud schemes.
Altering the valuation of accounts receivable by failing to establish appropriate reserves and allowances and recognize related expenses. Misclassifying investments to realize gains or avoid recognizing losses in current results. When preparing IFRS opening balances, writing off inventory when future value exists.

Increased subjectivity of accounting estimates could decrease the transparency and comparability of reported accounting numbers.
Unscrupulous preparers of the financial statements may over or understate asset values for their own purpose.

Appraisers and valuators can arrive at different values for business and assets due to differences in assumptions and data. Given the ability to revalue assets to fair value, some managers may choose to shop their appraisals or valuations or, in the extreme, simply fabricate them.
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The flexibility offered to managers on the numbers presented on the financial statements increases the risk of fraud.
Under IFRS, investment property purchased with $1 million can be appreciated to the fair value of $4 million, which increases the value of total assets. The appraised amount is recorded directly in retained earnings.

Given the ability to revalue assets to fair value, some mangers may choose to shop their appraisals or valuations or, in the extreme, simply fabricate them.
Lafleche, Daniel, and Patrick Mcparland. "Transition Anomaly or Fraud?" (Summer 2010): n. pag. Web. 6 Mar. 2014. <http://www.grantthornton.ca/resources/insights/publications_ext/Transition_anomaly_or_fraud_CMAUpdate_Summer2010.pdf>.

Under IFRS, managers may manipulate the numbers, thus decreases debt-to-equity ratio.

Accountants and auditors think that in case IFRS is applied, comprehensibility and reliability of financial statements shall increase, at the same time accounting frauds shall decrease.
Based on firm-level observation for 21 countries, IAS adopters display lower earnings management, greater conditional accounting conservatism, and higher value relevance. Under principles-based standards, auditors constrain aggressive reporting more under a weaker regulatory regime than under a stronger regulatory regime. IFRS encourage reporters to greater exercise of professional judgment, which will increase in reporting discretion, without the necessary constraints of enforcements, can be abused and hence result in a decline in reporting quality.
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A higher incidence of corporate accounting fraud occurred inside the United States as compared to outside the United.
Countries Reporting Accounting During the Period 2001 - 2005

Rules-Based GAAP
United States

Principles-Based GAAP (or IFRS)

Australia, France, Ireland, Italy, Netherlands, Switzerland, United Kingdom

Only eight countries out of 19 classified as following IFRS reported accounting scandals during the 2001-2005 period.
During the five years, more than three times as many accounting scandals were reported in the United States than in principles-based jurisdictions statements with all other things being equal.

Nisbett, Accounting Scandals: Rules vs. Principles Matter?, November 2007, Tennessee CPA Journal Page 10
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Kenya represents one of the few countries to adopt IFRS at the country level.
Kenya, which represents a country in the early stages of economic development, suffers from weak institutions and a lack of resources and infrastructure.
In 1999, Kenya Companies Act requires all companies to adopt IFRS and to present accounts that show a true and fair view of the companys affairs. (Improvement #1 or weakness in old GAAP system) Improvement#2

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Armstrong et al. (2010) find that IFRS adoption events in Europe generated positive capital market reactions.
Differences in institutional context, cultural factors and business environment make European accounting system different from each other. The introduction of IASB standard has not let to a systematic improvement of the earning management. Legal enforcement is positively related with the reduction of earnings management. 3 examples: implementation in developed countries.

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The IFRS adoption improved accounting quality of China, which is a major developing country with regulated market under rapid change.
Chinas change toward a free-market enterprise system makes accounting systems developed under socialist philosophy totally inadequate for the emerging capitalist structure. Chinese listed firms mandated to report with substantially IFRS-convergent accounting standard since 2007. (details on improvement since 2007) The accounting quality in China improved with decreased earnings management and increased value relevance of accounting measures.

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Countries have higher risk of fraud can use the COSO framework to mitigate the risk.
Setting the right tone at the top can help building an ethical environment. Performing an IFRS conversion fraud risk assessment can help identifying potential fraud risks and schemes. Designing and implementing antifraud control activities with close monitoring can effectively manage risks.
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