Hexagon Fraud: Detection of Fraudulent Financial Reporting in State-Owned Enterprises Indonesia

This study aims to detect fraudulent financial reporting using hexagon fraud analysis, including seven factors: financial stability, external pressures, ineffective monitoring, auditor changes, change in director, arrogance, and collusion. The subject of this research is a public company consolidated audit report of state-owned enterprises. The existence of conflicting results, the phenomenon of fraudulent financial reporting, and limited research using the hexagon of fraud theory prompted this research to examine the factors that influence fraudulent financial reporting. The sample was selected using a sampling technique, with the criteria of state-owned enterprises listed on the Indonesia Stock Exchange in 2016–2020. The method used is quantitative, and the analytical method used is logistic regression analysis. The sampling technique used was purposeful sampling, so the number of samples was 125. The results of this study indicate that financial stability and external pressures have a positive effect on fraudulent financial reporting. However, ineffective monitoring, auditor changes, change in director, arrogance, and collusion do not affect fraudulent financial reporting.

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ANALISIS FAKTOR-FAKTOR DALAM PERSPEKTIF FRAUD TRIANGLE SEBAGAI PREDIKTOR FRAUDULENT FINANCIAL REPORTING

E-Jurnal Ekonomi dan Bisnis Universitas Udayana ◽

10.24843/eeb.2018.v07.i01.p09 ◽

2018 ◽

pp. 251

Author(s):

I Gusti Putu Oka Surya Utama ◽

I Wayan Ramantha ◽

I Dewa Nyoman Badera

Keyword(s):

Organizational Structure ◽

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

Sampling Technique ◽

External Pressure ◽

Fraud Triangle ◽

Fraudulent Financial Reporting ◽

Financial Need ◽

Positive Effect

The reduction of financial reporting information’s quality is caused by management fraud behavior by manipulate the financial reporting in order to looks good. This research aims to obtain empirical evidence the effect of fraud triangle factors are financial stability, external pressure, personal financial need, financial targets, nature of industry, ineffective monitoring, organizational structure, and auditor switching to fraudulent financial reporting in nonfinancial companies which listed in Indonesia Stock Exchange period 2012-2014. The sample determined by utilizing purposive sampling technique, therefore as many as 156 of observation sample was obtained. The data observed by logistic regression analysis method. The results show that pressure element these are financial stability, external pressure, and personal financial need has a positive effect to fraudulent financial reporting. Opportunity element these are organizational structure has a negative effect to fraudulent financial reporting. Rationalization element, auditors switching has a positive effect to fraudulent financial reporting. Meanwhile financial targets, nature of industry, and ineffective monitoring have no effect.

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ANALISIS PENGARUH FRAUD PENTAGON DALAM MENDETEKSI FRAUDULENT FINANCIAL REPORTING PADA PERUSAHAAN JASA NONKEUANGAN

Jurnal Manajemen ◽

10.31937/manajemen.v12i1.1596 ◽

2020 ◽

Vol 12 (1) ◽

pp. 104-124

Author(s):

Yuliamos Tirta Wijaya Pasaribu ◽

Synthia Madya Kusumawati ◽

L. Jade Faliany

Keyword(s):

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

Secondary Data ◽

Financial Statements ◽

External Pressure ◽

Annual Reports ◽

Fraudulent Financial Reporting ◽

Service Companies ◽

Positive Effect

Abstract– This research aimed at analyzing the effect of fraud pentagon proxied by nine variables, namely financial stability, personal financial needs, external pressure, financial targets, ineffective monitoring, industry characteristics, auditor changes, director changes, and frequent number of CEO’s picture towards fraudulent financial reporting proxied by Beneish M-Score at non-financial service companies listed on the Indonesia Stock Exchange (IDX) period 2015-2017. The data used were secondary data obtained from annual reports and financial statements of nonfinancial service companies period 2015-2017 with a total of 285 eligible samples. The data analysis methods used were descriptive statistical analysis and logistic regression analysis. The results showed that the variables of financial stability and the nature of the industry generated a significant and positive effect on fraudulent financial reporting. Meanwhile, the variables of personal financial needs, external pressure, financial targets, ineffective monitoring, auditor changes, director changes, and often the CEO's image were not significant to fraudulent financial reporting. Keywords: Fraud Pentagon, Fradulent Financial Reporting, Beneish M-Score

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Analysis of Fraudulent Financial Reporting With the Role of KAP Big Four as a Moderation Variable: Crowe's Fraud's Pentagon Theory

International Journal of Financial Research ◽

10.5430/ijfr.v11n5p180 ◽

2020 ◽

Vol 11 (5) ◽

pp. 180

Author(s):

Maylia Pramono Sari ◽

Nindya Pramasheilla ◽

Fachrurrozie ◽

Trisni Suryarini ◽

Imang Dapit Pamungkas

Keyword(s):

Financial Reporting ◽

Financial Stability ◽

Audit Committee ◽

Stock Exchange ◽

Sampling Technique ◽

Fraudulent Financial Reporting ◽

Ceo Duality ◽

Fraud Risk ◽

Big Four

The purpose of this study is to provide empirical evidence of pentagon fraud risk factors sush as financial targets, financial stability, number of audit committee members, nature of industry, change in auditors, auditor opinion, change in director, proportion of the independent commissary, frequent number of CEO pictures, and CEO duality on fraudulent financial reporting with KAP big four as a moderating variable. The samples in this study were all state-owned companies listed on the Indonesia Stock Exchange in 2014-2018. The purposive sampling technique was used in sampling so that 55 companies were obtained. This study uses logistic regression analysis techniques with SPSS version 26. The results of the study indicate that financial stability and the auditor's opinion influence the fraudulent financial reporting. However, financial targets, number of audit committee members, nature of industry, change in auditors, change in director, proportion of the independent commissary, frequent number of CEO pictures, and CEO duality not effect on fraudulent financial reporting.

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The Analysis of Fraudulent Financial Reporting Determinant through Fraud Pentagon Approach

Jurnal Dinamika Akuntansi ◽

10.15294/jda.v7i1.4036 ◽

2017 ◽

Vol 9 (2) ◽

pp. 154-165

Author(s):

Siska Apriliana ◽

Linda Agustina

Keyword(s):

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

Sampling Technique ◽

Annual Reports ◽

Fraud Triangle ◽

Manufacturing Companies ◽

Fraudulent Financial Reporting ◽

Fraud Theory

The purpose of this study was to analyze the prediction of fraudulent financial reporting with the perspective of pentagon fraud. Pentagon fraud theory is the development of the theories of fraud triangle and fraud diamond. The Pentagon fraud theory adds an element of arrogance in addition to the other four existing elements namely pressure, opportunity, rationalization, and competence or capacity. The population in this study were 157 manufacturing companies listed on the Indonesia Stock Exchange (IDX) period 2013-2015. The samples of 46 companies were obtained by using purposive sampling technique, so the analysis unit was 138. Data was analyzed by using descriptive statistical analysis and logistic regression analysis. The test result showed that financial stability, the quality of external auditor, and the number of CEOs photos in the annual reports of the companies had a positive effect on the prediction of fraudulent financial reporting, while financial targets, liquidity, institutional ownership, monitoring effectiveness, replacement of external auditors, and changes of corporate directors had no significant effect on the prediction of fraudulent financial reporting. The conclusion of this study indicates that unstable financial condition, the quality of corporate audit and the level of CEO's arrogance can influence the occurrence of fraudulent financial reporting.

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Pengaruh Elemen-Elemen Fraud Pentagon Terhadap Kecurangan Laporan Keuangan

JURNAL EKSPLORASI AKUNTANSI ◽

10.24036/jea.v2i4.292 ◽

2020 ◽

Vol 2 (4) ◽

pp. 3405-3418

Author(s):

Alfamet Randa ◽

Sany Dwita

Keyword(s):

Logistic Regression ◽

Regression Analysis ◽

Data Analysis ◽

Financial Reporting ◽

Stock Exchange ◽

Empirical Studies ◽

Sampling Technique ◽

Fraudulent Financial Reporting ◽

Real Estate Sector ◽

Final Sample

This study aims to determine the effect of pentagon fraud’s theory in detecting fraudulent financial reporting empirical studies on companies in property and real estate sector in Indonesia listed on the Stock Exchange in 2014-2018. The sampling technique used purposive sampling with the final sample of 18 companies. Data analysis used in this research is logistic regression analysis. The result of this research showed that : Pressure (ROA), Opportunity (BDOUT), Competence (DCHANGE) and Arogance (CEOPIC) have no significant effect on fraudulent financial reporting. While the Rationalization (Change of Auditor) has a significant effect on fraudulent financial reporting.

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Analisis Perbandingan Fraud Pentagon dengan Beneish Ratio dalam Pendeteksian Fraudulent Financial Reporting dengan Opini Audit sebagai Variabel Moderating

JURNAL ILMIAH AKUNTANSI UNIVERSITAS PAMULANG ◽

10.32493/jiaup.v9i1.4399 ◽

2021 ◽

Vol 9 (1) ◽

pp. 1

Author(s):

Aris Sanulika ◽

Wahyu Nurul Hidayati

Keyword(s):

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

Secondary Data ◽

Growth Index ◽

Financial Statements ◽

Fraudulent Financial Reporting ◽

Gross Margin ◽

Publicly Traded Companies ◽

Asset Quality

ABSTRACTFraudulent Financial Reporting is a deliberate attempt by a company to deceive and mislead users of financial statements, especially investors and creditors, by presenting and manipulating the material value of financial statements. This study aims to determine how the auditor's opinion can moderate the comparative analysis of the pentagon fraud with the beneish ratio in the detection of fraudulent financial reporting. The type of data used in this study is comparative quantitative data. The data source in this study is secondary data. The population in this study are banking companies listed on the IDX. With a sample of 16 publicly traded companies engaged in financial and banking institutions and were listed on the Indonesia Stock Exchange in 2014-2017. The results of this study indicate that of 64 samples there were 12.5% which indicated that the financial statements had been manipulated. Auditor opinions can increase the influence of Financial Stability, external auditor quality, change in auditor, change of directors, days sales in receivables index, sales gross margin Index, Asset Quality Index, growth index, depreciation index, sales, and general administration expenses index, leverage index, total accrual to fraudulent financial reporting. Beneish Ratio affects Fraudulent Financial Reporting while Fraud Pentagon does not affect Fraudulent Financial Reporting

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Fraudulent Financial Reporting: An Application of Fraud Pentagon Theory to Association of Southeast Asian Nations Corporate Governance Scorecard

Journal of Advanced Research in Law and Economics ◽

10.14505//jarle.v9.5(35).26 ◽

2019 ◽

Vol 9 (5) ◽

pp. 1729 ◽

Cited By ~ 1

Author(s):

Imang Dapit PAMUNGKAS ◽

St. Dwiarso UTOMO

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Financial Stability ◽

Sampling Technique ◽

External Pressure ◽

Managerial Ownership ◽

Fraudulent Financial Reporting ◽

Audit Opinion ◽

Opinion Change ◽

Insignificant Effect

This study aims to detect and examine fraudulent financial reporting by applying fraud pentagon theory to all companies implementing the Association of Southeast Asian Nations (ASEAN) Corporate Governance Scorecard in Indonesia. This study has the following objectives: to examine and analyze the effect of financial stability, external pressure, financial target, nature of industry, audit opinion, change of directors, managerial ownership against fraudulent financial reporting. In this research, we use correlation research type. The population of this sample is all sectors of companies listed on the Indonesia Stock Exchange. Using sampling technique in the form of Purposive Sampling Technique applying ASEAN Corporate Governance Scorecard in Indonesia with research period of 2012 to 2016, which produce 30 samples, multiple linear regression analysis using SPSS version 22. The results of this study found that financial stability, managerial ownership has a negative and insignificant effect on fraudulent financial reporting. External pressure, nature of industry has a negative and significant effect on fraudulent financial reporting. Financial Target, Audit Opinion, Change of Directors has a positive and insignificant effect on Fraudulent Financial Reporting.

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Fraud Diamond Theory in Detecting Financial Reporting Manipulation: A Case of Mining Companies Listed on the Indonesia Stock Exchange

International Journal of Economics and Statistics ◽

10.46300/9103.2021.9.10 ◽

2021 ◽

Vol 9 ◽

pp. 61-68

Author(s):

Mafudi ◽

Atiek Sri Purwati ◽

Agung Praptapa ◽

Sugiarto ◽

Yonatan Daya Persada

Keyword(s):

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

Financial Statement ◽

Linear Regression Method ◽

Financial Statement Fraud ◽

Mining Sector ◽

Financial Reports ◽

Purposeful Sampling ◽

Triangle Theory

Forensic accounting helps auditor in collecting information while conducting necessary assessment to discover fraud practice. One popular theory in the field is the fraud diamond theory. This study implements the theory to detect the existence of financial statement fraud on mining sector in Indonesia. The diamond fraud model as the enhancement of the triangle theory of fraud concerns budget priorities, financial stability, inefficient monitoring, adjustments to the auditor and changes to the manager. As a dependent variable, financial statement manipulation funded by income control is used. The sampling of 9 companies listed on the Indonesian Stock Exchange in the mining sector in 2017-2019 was chosen using purposeful sampling methods, resulting in 27 data observations. The data testing was performed by a multi-linear regression method. This study showed that financial targets and financial stability affect the occurrence of fraud in financial reports. Simultaneously, insufficient monitoring, auditing and change of the director have no impact on the financial statements.

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Fraudulent Financial Reporting Based of Fraud Diamond Theory: A Study of the Banking Sector in Indonesia

JIAFE (Jurnal Ilmiah Akuntansi Fakultas Ekonomi) ◽

10.34204/jiafe.v4i2.1112 ◽

2019 ◽

Vol 4 (2) ◽

pp. 135-150

Author(s):

Tarmizi Achmad ◽

Imang Dapit Pamungkas

Keyword(s):

Regression Analysis ◽

Financial Reporting ◽

Financial Stability ◽

Banking Sector ◽

Negative Impact ◽

Total Sample ◽

External Pressure ◽

Fraudulent Financial Reporting ◽

External Variables ◽

Positive Effect

The research aims to analyse whether external pressure, financial stability, financial targets, ineffective monitoring, rationalization and capability effect on fraudulent financial reporting. The population this study is banking company listed on the Indonesia Sctock Exchange with a total sample of 87 banking companies in 2011-2016. Based on the results of research using regression analysis, only external variables of incentive and financial targets have a positive effect on fraudulent financial reporting. Meanwhile, financial stability and capability have a negative impact on fraudulent financial reporting. Further, other variables such as ineffective monitoring and rationalization do not affect fraudulent financial reporting.

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Faktor-Faktor Yang Mempengaruhi Fraudulent Financial Reporting

Akuntabilitas ◽

10.15408/akt.v14i2.22557 ◽

2021 ◽

Vol 14 (2) ◽

pp. 139-152

Author(s):

Wulanda Maya Sari ◽

Anik Irawati

Keyword(s):

Logistic Regression ◽

Data Analysis ◽

Financial Reporting ◽

Financial Stability ◽

Stock Exchange ◽

External Pressure ◽

Analysis Method ◽

Fraudulent Financial Reporting ◽

Spss Software ◽

Score Model

This study aims to empirically prove the influence of financial stability, external pressure, and ineffective monitoring on fraudulent financial reporting. Financial stability was measured using a comparison of total assets. External pressure was measured using leverage. Meanwhile, ineffective monitoring was measured using the ratio of independent commissioners’ number. The dependent variable in this study was fraudulent financial reporting. It was measured using the F-Score Model. The sample in this study were 21 State Owned Enterprises (BUMN) listed on Indonesia Stock Exchange in period of 2017-2019. The data analysis method used in this study was Logistic Regression using SPSS software version 20. The results of this study indicate that financial stability has no influence on fraudulent financial reporting. Meanwhile, external pressure and ineffective monitoring influence fraudulent financial reporting.How to cite:Sari, W. M., & Irawati, A. (2021). Faktor-faktor yang Mempengaruhi Fraudulent Financial Reporting. Akuntabilitas: Jurnal Ilmu Akuntansi, 14(2), 139-152.

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