Fraud Pentagon and Fraudulent Financial Reporting: Evidence from Manufacturing Companies in Indonesia and Malaysia

Research aims: This study aims to examine the influence of fraud pentagon concept on fraudulent financial reporting.Design/Methodology/Approach: This study’s population was manufacturingcompanies listed in Indonesia Stock Exchange and Malaysia Stock Exchange. 120 manufacturing companies in Indonesia and 118 manufacturing companies in Malaysia were involved as samples. The data analysis method used in this study is multiple linear regression.Research findings: The results showed that financial target, financial stability, quality of external auditor, external pressure, and nature of industry variables influenced fraudulent financial reporting. In contrast, personal financial need, ineffective monitoring, change in auditor, change in director, and frequent number of CEO’s pictures variables had no effect on fraudulent financial reporting. For Indonesia, it was found that financial target, financial stability, and the quality of external auditor influenced fraudulent financial reporting. While, in Malaysia, the results showed that financial stability, external pressure, and nature of industry variables influenced fraudulent financial reporting in Malaysia.Theoretical contribution/Originality: These results support the financial target and quality of external auditor hypothesis in Indonesia, financial stability hypothesis in Indonesia and Malaysia, external pressure and nature of industry hypotheses in Malaysia, stating that fraud pentagon factors affect fraudulent financial reporting. It is also proved that there are different levels of fraudulent financial reporting in Indonesia and Malaysia. Indonesia has fraudulent financial reporting cases higher than Malaysia.

Pendeteksian Financial Statement Fraud melalui Komponen Fraud Triangle

<p><em>The aim of this study is deemed to analyze the influence of fraud triangle as a tool to detect the fraud in a financial statement. The research focuses on the trading sector companies from 201</em><em>4</em><em> to 2016 that are listed on the Indonesia Stock Exchange. After selecting these companies, 24 of them become the definite samples. They are divided into companies that are probable doing financial </em><em>statement </em><em>fraud and those which are not based on the model of Beneish M-Score. For that, this research uses logistic regression. The results show that those that have significant effect on financial statement fraud are external pressure, ineffective monitoring, and financial stability. And those insignificant variables include auditor change, financial target, and the nature of industry. </em></p>

FRAUD PENTAGON THEORY FOR DETECTING FINANCIAL STATEMENT FRAUDULENT

Cases of fraud from 2019 to 2020 in Indonesia involve companies of state-owned enterprises. This study aimed to analyze the factors that encourage financial statement fraudulent with analysis of fraud pentagon theory. This research analyzes the influence of variable pressure proxied by financial stability, opportunity proxied by auditor change, rationalization proxied by audit opinion, capability proxied by change of directors and arrogance proxied by the number of CEO’s. This reserach uses 100 of State-Owned Enterprises companies listed on Indonesia Stock Exchange in the period 2015-2019. Data analyzed by using logistic regression. The results showed that pressure and opportunity influence the financial statement fraudulent, while rationalization, capability, and arrogance have not.

THE INFLUENCE OF FRAUD TRIANGLE UPON THE EXISTENCE OF FINANCIAL STATEMENT FRAUD

<p>This research is designed to find empirical evidence on the influence of fraud triangle factors upon the existence financial statement fraud in Indonesian Listed companies. The research samples are 105 public companies consisting 42 fraud firms and 63 non fraud firms. Classification between fraud firm and non fraud firm uses the Eckel index.</p><p>The result indicate that: first, the external pressure variable that proxied by debt, personal need variable that proxied by insiders’ stock ownership,and CEO’s education, and inefective monitoring variable taht proxied by unexistence antifraud program and training have positive significant influence to the existence of financial statement fraud. Second, the personal financial need variable taht proxied by CEO’s Tenure, the inefective monitoring variable that proxied by unexistence whistleblowing program, and rationalization variable that proxied by auditor change have negative significant to the existence of financial statement fraud. Third, simultaneously all independent variables have an influence to the existence of financial statement fraud.</p><p> </p><p><em>Keywords: financial statement fraud, income smoothing, fraud triangle.</em></p>

PENDETEKSIAN KECURANGAN LAPORAN KEUANGAN MENGGUNAKAN FRAUD PENTAGON (Studi Pada Perusahaan Manufaktur Sub Sektor Makanan dan Minuman yang Terdaftar di Bursa Efek Indonesia Periode 2016-2018)

Laporan keuangan perusahaan harus mencerminkan keadaan perusahaan yang sesungguhnya. Namun kinerja manajemen terkadang tidak sebaik yang diharapkan, sehingga hal tersebut menjadi faktor pendorong bagi manajemen untuk melakukan kecurangan dan menyajikan laporan keuangan secara tidak wajar. Penelitian ini bertujuan untuk mengetahui pengaruh fraud pentagon terhadap kecurangan laporan keuangan pada perusahaan manufaktur sub sektor makanan dan minuman yang terdaftar di BEI periode 2016-2018. Teknik pengambilan sampel adalah purposive sampling dan diperoleh 36 sampel. Metode analisis data yang digunakan pada penelitian ini adalah metode regresi linier berganda. Hasil penelitian menunjukkan bahwa secara simultan financial stability, external pressure, ineffective monitoring, change in auditor, change in director dan frequent number of CEO picture berpengaruh signifikan terhadap kecurangan laporan keuangan. Secara parsial, financial stability dan change in director berpengaruh signifikan terhadap kecurangan laporan keuangan. Sementara external pressure, ineffective monitoring, change in auditor, dan frequent number of CEO picture tidak berpengaruh terhadap kecurangan laporan keuangan.

IDENTIFIKASI KECURANGAN LAPORAN KEUANGAN PADA PERUSAHAAN YANG LISTED DI JAKARTA ISLAMIC INDEX 70: PENDEKATAN FRAUD DIAMOND THEORY

enelitian ini bertuiuan untuk mengidentifikasi kecurangan laporan keuangan padaperusahaan yang listed di Jakarta Islamic Index 70 dengan pendekatan Fraud DiamondTheory. Populasi penelitian adalah perusahaan pada Jakarta Islamic Index 70 pada tahun2018 dengan sampel 55 perusahaan. Tehnik analisis data menggunakan Fraud Score. Hasilpenelitian menunjukkan bahwa pada variabel financial stability, financial target danopportunity berpengaruh positif dan signifikan, sedangkan pada variabel eksternal pressure,change in auditor, change of director tidak memiliki pengaruh terhadap identifikasikecurangan laporan keuangan.