Fraudulent Financial Reporting: A Fraud Pentagon Analysis

2019 ◽  
Vol 4 (4) ◽  
pp. 106-113
Author(s):  
Satria Tri Nanda ◽  
Raisya Zenita ◽  
Neneng Salmiah
Keyword(s):  
Human Factors ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Jel Classification ◽  
Recent Theory ◽  
Fraudulent Financial Reporting ◽  
Financial Statement Fraud ◽  
Financial Reports ◽  
Financial Report ◽  
Negative Effect

Objective – The massive and broad impact caused by fraud has made it widely discussed by researchers. Several theories have been developed to explain the cause of fraud. The most recent theory that attempts to explain fraud is pentagon fraud. This study attempts to explain the effect of pentagon fraud on the detection of financial statement fraud in 624 companies listed on the Indonesian stock exchange. Methodology/Technique – Data from financial statements published in 2018 were analyzed using multiple regression analysis. Findings – The results of data analysis using E-Views have proven that Pressure, Opportunity, Arrogance and Rationalization have a negative effect on fraudulent financial reporting. However, competence is known to have no significant effect on fraudulent financial reporting. Novelty – The results suggest that human factors such as pressure, arrogance and rationalization encourage fraudsters to produce fraudulent financial reports. These findings imply that human factors such as pressure arrogance and rationalization are important to be considered in designing any anti-fraud strategy. Type of Paper: Empirical Keywords: Fraud Pentagon; Fraudulent Financial Report; Opportunity, Pressure. Reference to this paper should be made as follows: Nanda; S, T; Zenita R; Salmiah N; 2019. Fraudulent Financial Reporting: A Fraud Pentagon Analysis, Acc. Fin. Review 4 (4): 106 – 113. https://doi.org/10.35609/afr.2019.4.4(2) JEL Classification: M40, M41, M49.

scholarly journals Pengaruh Kecurangan Laporan Keuangan terhadap Nilai Perusahaan: Ditinjau dari Perspektif Fraud Pentagon (Kasus di Indonesia)

2020 ◽  
Vol 20 (1) ◽  
pp. 121
Author(s):  
Desi Elviani ◽  
Syahril Ali ◽  
Rahmat Kurniawan
Keyword(s):  
Financial Reporting ◽  
Firm Value ◽  
Stock Exchange ◽  
Sample Selection ◽  
Financial Statement ◽  
Fraudulent Financial Reporting ◽  
Financial Statement Fraud ◽  
Company Value ◽  
Negative Effect ◽  
Five Elements

This study aims to examine how the influence of fraudulent financial reporting on firm value is viewed from the perspective of a pentagon fraud with a sample of 71 companies from the infrastructure, utilities and transportation sectors in the Indonesia Stock Exchange in 2014-2018. The sample selection used was purposive sampling method. Company value is measured by price book value, financial statement fraud is measured by fraud-score models. There are two variables that have a positive and significant influence, namely the opportunity and arrogance variables, the two variables present two of the five elements of pentagon fraud, where as the three variables, pressure, rasionalization, competence, do not affect the fraudulent financial reporting. The results of this study have proven that fraudulent financial reporting has a negative effect on firm value.

scholarly journals The Effect of CFO Demographics on Fraudulent Financial Reporting

2020 ◽  
Vol 24 (1) ◽  
pp. 21
Author(s):  
Yulia Frischanita, Yustrida Bernawati
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Control Variable ◽  
Financial Statements ◽  
Financial Statement ◽  
Manufacturing Companies ◽  
Fraudulent Financial Reporting ◽  
Financial Statement Fraud ◽  
Negative Effect ◽  
Fraudulent Financial Statements

This study aims to examine the effect of CFO demographics on financial statement fraud. The results contribute to companies for increasing CEO and CFO elections and corporate governance designed to prevent illegal actions. The sample in this study was manufacturing companies listed on the Indonesia Stock Exchange in 2016-2018 with 308 data and hypothesis testing using multiple regression analysis techniques. The test results show that the age of the CFO affects the fraudulent financial statements. More mature the CFO engage with fraudulent financial statements. Other results indicate that the level of education, gender and experience of the CFO have no effect on financial statement fraud. The control variable used is ROA which has a positive effect on financial statement fraud. While company size and leverage have a negative effect on financial statement fraud.

scholarly journals The Composition of Independent Board of Commissioner and Number of Board of Commissioner Meeting Towards Fraudulence of Financial Report (Empirical Study at Public Company Listed at Indonesia Stock Exchange in 2011-2017)

2019 ◽  
Vol 10 (4) ◽  
pp. 96
Author(s):  
Sudarman ◽  
Aniqotunnafiah ◽  
Masruri
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Descriptive Analysis ◽  
Financial Statements ◽  
Board Composition ◽  
Fraudulent Financial Reporting ◽  
Public Companies ◽  
Financial Report ◽  
Negative Effect

This study aims to obtain empirical evidence about the effect of corporate governance mechanisms on fraudulent financial reporting. The variables of corporate governance used are independent board composition, frequency of board commissioner meetings, and external auditor quality as moderating variables between the influences of independent board composition, number of board of commissioners meetings against fraudulent financial reporting. The population of this study was public companies listed on the Indonesia Stock Exchange in 2011 - 2017. The total samples of this study were 76 companies, consist of 38 companies reported committing fraudulently financial statements and 38 companies that did not cheat financial statements. Data analysis was carried out by descriptive analysis, crosstab and hypothesis testing using the logistic regression method. The results of this study indicate the composition of the independent board of commissioners and the frequency of board of commissioners meetings has a significant and negative effect on the fraudulent financial report. Also, the quality of external auditors can strengthen the influence of the composition of the independent board of commissioners and the number of board of commissioners meetings on the fraudulent financial reporting.

Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable

2021 ◽  
Vol 5 (4) ◽  
pp. 01-12
Author(s):  
Andalia Andalia ◽  
Amiruddin Amiruddin ◽  
Grace T. Pontoh
Keyword(s):  
Regression Analysis ◽  
Financial Reporting ◽  
Internal Control ◽  
Sampling Method ◽  
Stock Exchange ◽  
Jel Classification ◽  
Fraudulent Financial Reporting ◽  
Factors Affecting ◽  
Effect Of Pressure ◽  
Analysis Technique

Objective - This study aims to examine and analyze the effect of pressure, opportunity, rationalization, ability and arrogance on fraudulent financial reporting with independent commissioners as the moderating variable. Methodology/Technique - The object of this research is all companies listed on the Indonesian Stock Exchange during 2019. The research sample was obtained through purposive sampling method and resulted in 215 companies. The analysis technique used is multiple regression analysis and Moderated Regression Analysis (MRA). Findings - The results show that pressure, opportunity, rationalization, ability and arrogance had a significant effect on fraudulent financial reporting. The results of the moderation regression analysis show that independent commissioners moderate the effect of pressure and arrogance on fraudulent financial reporting. Meanwhile, independent commissioners did not moderate opportunities, rationalization, and capacity for fraudulent financial reporting. Novelty - This research contributes to the pentagon fraud theory, which proves that the elements contained in this theory can be used as a basis for analyzing fraud committed by companies, and contributing to the company so that the company's internal control is improved and the presence of an independent board of commissioners is not only a fulfillment of the company's internal control. regulations made by the IDX. Type of Paper: Empirical. JEL Classification: G32, M21, M41, M42. Keywords: Pressure; Opportunities; Rationalization; Arrogance; Fraudulent Financial Reporting Reference to this paper should be made as follows: Andalia; Amiruddin; Pontoh, G.T. (2021). Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable, Accounting and Finance Review, 5(4): 01 – 12. https://doi.org/10.35609/afr.2021.5.4(1)

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

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.

scholarly journals Determinan Fraudulent Financial Reporting Using Fraud Pentagon Analysis

2019 ◽  
Vol 6 (2) ◽  
pp. 105-114
Author(s):  
Fidyah Quraini ◽  
Yuni Rimawati
Keyword(s):  
Financial Reporting ◽  
Financial Stability ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
External Pressure ◽  
Fraudulent Financial Reporting ◽  
Financial Report ◽  
External Auditors ◽  
Monitoring Quality

This research aimed at knowing factors of fraudulent financial reporting using pentagon fraud analysis. This research analyzed the influence of financial target, financial stability, external pressure, institutional ownership, ineffective monitoring, quality of external auditors, change of auditors, change of directors, and number of CEO’s picture in fraudulent financial report. Sample in this research were 14 go public government companies from 2013 to 2017. Source of data in this research were secondary data in form of annual report in official website of Indonesia Stock Exchange. The examination of this research used logistic regression. The result of this study showed that the influence of external pressure expected fraudulent financial report, while financial target, financial stability, institutional ownership, ineffective monitoring, quality of external auditors, changing auditors, changing directors, and a number of CEO’s picture often did not influence the fraudulent financial reporting.

scholarly journals Analisis Pengaruh Kompleksitas Perusahaan, Profitabilitas dan ukuran Perusahaan terhadap Audit Delay

2017 ◽  
Vol 5 (1) ◽  
pp. 1-7
Author(s):  
Firdha Indiana ◽  
Triandi .
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Time Difference ◽  
Financial Statement ◽  
Manufacturing Companies ◽  
Financial Reports ◽  
Factors Affecting ◽  
Negative Effect

Timeliness in financial reporting is an obligation for companies listed in the Indonesia Stock Exchange to submit periodic financial reports. Delay in financial reporting will have a negative effect on a company, because it may indicate the existence of financial problem within the company. The length of time of an audit conducted by an auditor can be seen from the time difference between the financial statement date and the date the auditor’s report was signed in the financial statement. The time difference is often called an audit delay or audit report lag. The longer the auditor completes the audit, the longer the delay is. If the audit delay is long, the delay in submitting financial statement to stakeholders will be longer. Prompt financial reporting is essential to maintain the accuracy of information presented in the financial statement. According to previous studies, there are many factors affecting audit delay, including company’s complexity, auditor’s opinion, reputation of public accounting firm, solvability or leverage, profitability, and company’s size. This motivates the author to identify what factors affect audit delay and whether the factors known from previous studies remain consistent. This study aims to analyze the effect of company’s complexity, profitability, and company’s size on audit delay in manufacturing companies in Indonesia Stock Exchange in 2012 and 2013. The data sample is taken from 102 companies. The method of analysis used is multiple linear regression analysis, which is preceded by the classical assumption test, namely normality test, heteroscedasticity test, multicollinearity test, and autocorrelation test. The result gathered from the manufacturing companies listed on Indonesia Stock Exchange in 2012 and 2013 show that, in partially conducted tests, company’s complexity has no effect on audit delay. Profitability has an effect on audit delay. Company’s size however, has an effect on audit delay. On the other hand, from simultaneously conducted test, it is known that company’s complexity, profitability, and company’s size have simultaneous effect on audit delay.

scholarly journals Pengaruh Ukuran Perusahaan, Solvabilitas, dan Profitabilitas terhadap Audit Delay (Study empiris pada perusahaan perbankan yang terdaftar di Bursa Efek Indonesia)

2019 ◽  
Vol 7 (2) ◽  
pp. 318-330
Author(s):  
Magfira Alawiah ◽  
David HM Hasibuan
Keyword(s):  
Financial Reporting ◽  
Firm Size ◽  
Stock Exchange ◽  
Financial Statements ◽  
Financial Statement ◽  
Financial Report ◽  
Negative Effect ◽  
Partial Factor ◽  
A Company ◽  
Method Analysis

Timeliness in financial reporting is an obligation for companies listed on the Indonesia Stock Exchange to submit periodic financial report. Delay in financial reporting will have a negative effect on a company, because it may indicate the existence of financial problem within the company. The length of time of an audit conducted by an auditor can be seen from the time different between the financial statment date and the date the auditor’s report was signed in the financial statement. The time different is often called an audit delay. The longer the auditor completes the audit, the longer the audit delay is. If the audit delay is long, the delay in submitting financial statment to stakeholders will be longer. Prompt financial reporting is essential to maintain the accuracy of information presented in the financial statement.             The purpose of this study is to identify and explain the influence of Firm Size, Solvability, and Profitability to Audit Delay. The population used is Banking Company listed on Indonesia stock Exchange during the period 2015-1017. The variables used in this research are Firm Size, Solvability, and Profitability. The data used is the company’s financial statements are published through the website www.idx.co.id. Data colletion method used is purposive sampling method. Analysis of the data in this study using classic assumption test, multiple linear regressioin analysis and hypothesis testing.             Based on the research that has been done can be the concluded that the partial factor Firm Size significant effect on Audit Delay while the Solvability and Profitability has no significant effect on Audit Delay. Simultaneously factor Firm Size, Solvability and Profitability effect on audit Delay the R Square value is 0.242 indicates that 24,2% of Audit Delay cab be explained by the independent variables used in the study, while the remaining 75,8% is explained by other variables.

scholarly journals FRAUDULENT FINANCIAL REPORTING: A PENTAGON FRAUD ANALYSIS

2019 ◽  
Vol 16 (2) ◽  
pp. 122-134
Author(s):  
Satria tri Nanda ◽  
Neneng Salmiah ◽  
Dina Mulyana
Keyword(s):  
Financial Reporting ◽  
Financial Stability ◽  
Stock Exchange ◽  
Secondary Data ◽  
Financial Statements ◽  
Annual Reports ◽  
Manufacturing Companies ◽  
Fraudulent Financial Reporting ◽  
Financial Reports ◽  
Fraudulent Financial Statements

Financial statements describe the company's financial condition. There are many gaps in the financial reports that enable management to commit fraudulent financial reporting. This study purpose to analyze the pentagon fraud, namely the pressure that is proxied by the financial target, the opportunity that is proxied by the effectiveness of monitoring (ineffective monitoring); Rationalization which is proxied by change in auditor; Competence which is proxied by the change of company directors; and Arrogance which is proxied by the number of CEO images that appear (number of CEO's picture), detects fraudulent financial statements measured using the Altman Z Score. The sample used in this study were 24 pharmaceutical sub-sector manufacturing companies registered on the Indonesia Stock Exchange during the period 2015 until 2017. The type of data used is secondary data obtained from annual reports and company financial statements for the 2015-2017 period. The analysis of the data used is multiple regression using the SPSS version 16. This study found that financial stability and ineffective monitoring influence fraudulent financial statements. Whereas auditor turnover, change of directors and the number of CEO photos that appear do not affect fraudulent financial statements.

scholarly journals DINAMIKA KARAKTERISTIK KOMITE AUDIT PADA AUDIT REPORT LAG

2021 ◽  
Vol 21 (2) ◽  
pp. 175
Author(s):  
Anak Agung Putu Gede Bagus Arie Susandya ◽  
Ni Nyoman Ayu Suryandari
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Sample Selection ◽  
Female Gender ◽  
Audit Report ◽  
Financial Report ◽  
Audit Period ◽  
Negative Effect

<em><span lang="IN">This study examines the role of the audit committee on audit report lag. The sample in this study was taken from all companies listed on the Indonesia Stock Exchange. The sample selection method using purposive sampling method. By using multiple regression analysis techniques, it is found that the competence of the audit committee</span><span>, </span><span lang="IN">number of members of the audit committee has a negative effect on the audit report lag.</span><span lang="IN">The higher the intensity of the audit committee meeting, the earlier financial reporting supervision occurs. </span><span>H</span><span lang="IN">igh quality of financial reporting makes the audit period of the financial report audit shorter. The independence of the audit committee does not appear affects the audit report lag. This is because the object of the examination of the financial statements itself is the annual report. On the other hand, the gender of the female audit committee has a negative effect on the audit report lag. The existence of female gender in the composition of the audit committee plays a</span><span>n important</span><span lang="IN"> role in shortening the time span for completion of audits by independent auditors</span></em>

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