DETECTION OF FINANCIAL STATEMENT FRAUD: STUDY IN INDONESIA BANKING AND ENERGY SECTOR COMPANIES

Authors

  • Gilang Jelita Santini Universitas Pembangunan Nasional Veteran Jakarta, Indonesia
  • Donny Maha Putra Universitas Pembangunan Nasional Veteran Jakarta, Indonesia

DOI:

https://doi.org/10.29040/ijebar.v8i3.13797

Abstract

Fraud potential in financial statements often occurs. For this reason, this study identifies aspects that cause financial statement fraud (FOFS), including financial targets (FTs), total accruals, and total assets (TATAs), and the industries' nature (NOIs) in the banking and energy sector companies in Indonesia. The data sample is the financial and annual reports of 122 banking and energy companies. The purposive sampling is used for the selection of the data. The analysis uses different test analysis methods and panel data regression tests. The results prove that FTs prove to be a strong predictor of FOFS in banking companies, while in energy companies it is not proven. Furthermore, TATAs have not been proven to affect FOFS in companies in both sectors. Meanwhile, NOIs have a negative effect on FOFS. The implication is for the banking sector, the potential for FOFS is more due to the disclosure of high Return on assets (ROA) and low-income ratios. In contrast, in the energy sector, companies are strongly influenced only by low-income ratios.

References

Abdurahman, Ghalib, S., & Maryono. (2020). Analisis Lingkungan Bisnis PT Adaro Energy, Tbk. Jurnal Bisnis Dan Pembangunan, 9(1), 2541–1403.

Abed, I A., Hussin, N., Haddad, H., Almubaydeen, T H., & Abed, I A. (2022, March 1). Creative Accounting Determination and Financial Reporting Quality: The Integration of Transparency and Disclosure. https://doi.org/10.3390/joitmc8010038.

ACFE-Global. (2020). Report to The Nations 2020 Global Study on Occupational Fraud and Abuse.

Agusputri, H., & Sofie, S. (2019). Faktor-faktor yang Berpengaruh Terhadap Fraudulent Financial Reporting dengan Menggunakan Analisis Fraud Pentagon. Jurnal Informasi, Perpajakan, Akuntansi, Dan Keuangan Publik, 14(2), 105–124. https://doi.org/10.25105/jipak.v14i2.5049.

AICPA. (2021). Consideration of Fraud in a Financial Statement Audit. AICPA.

Akbar, T. (2017). The Determination of Fraudulent Financial Reporting Causes by Using Pentagon Theory on Manufacturing Companies in Indonesia. International Journal of Business, Economics and Law, 14(5), 106–113. https://doi.org/10.22437/jaku.v5i3.10812.

Dechow, P. M., Ge, W., Larson, C. R., & Sloan, R. G. (2011). Predicting Material Accounting Misstatements. Contemporary Accounting Research, 28(1), 17–82. https://doi.org/10.1111/j.1911-3846.2010.01041.x.

Harman, S. A., & Bernawati, Y. (2021). Determinant of Financial Statement Fraud: Fraud Pentagon Perspective in Manufacturing Companies. Review of International Geographical Education (RIGEO), 11(4), 554–566. https://scholar.unair.ac.id/en/publications/determinant-of-financial-statement-fraud-fraud-pentagon-perspecti

Hasyim, L. W., Bukit, R., & Tarmizi, H. B. (2020). Analysis of Factors Which Affect The Fraud of Financial Statements in Banking Sector Companies Registered in Indonesia Stock Exchange. International Journal of Public Budgeting, Accounting and Finance. https://doi.org/10.3390/economies11010005

Isayas, Y. N. (2022). Determinants of banks’ profitability: Empirical evidence from banks in Ethiopia. Cogent Economics & Finance, 10(1). https://doi.org/10.1080/23322039.2022.2031433.

Jao, R., Mardiana, A., Holly, A., & Chandra, E. (2020). Pengaruh Financial Target dan Financial Stability Terhadap Financial Statement Fraud. Journal of Management, 4(1), 27–42.

Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305–360. https://doi.org/10.1016/0304-405X(76)90026-X.

Jullani, Mukhzarudfa, & Yudi. (2020). Detection of Fraudulent Financial Reporting using the Perspective of the Fraud Pentagon Theory. Jurnal Akuntansi Dan Keuangan Universitas Jambi, 5(3), 158–168. https://online-journal.unja.ac.id/jaku%0Ae-ISSN.

Khan, N. I., & Hapiz, A. A. M. (2022). Financial Statement Fraud: Evidence from Malaysian Public Listed Companies. Jurnal Intelek, 17(1), 181–194. https://doi.org/10.24191/ji.v17i1.15937.

Khoirunnisa, A., Rahmawaty, A., & Yasin. (2020). Fraud Pentagon Theory dalam Mendeteksi Fraudulent Financial Reporting Pada Perusahaan yang Terdaftar di Jakarta Islamic Index 70 (JII 70) Tahun 2018. BISNIS: Jurnal Bisnis Dan Manajemen Islam, 8(1), 97–110. http://dx.doi.org/10.21043/bisnis.v8i1.7381.

Li, Q. (2023). Textual Data Mining for Financial Fraud Detection: A Deep Learning Approach. https://doi.org/10.48550/arXiv.2308.03800.

Lionardi, M., & Suhartono, S. (2021). Pendeteksian Kemungkinan Terjadinya Fraudulent Financial Statement menggunakan Fraud Hexagon. Jurnal Akuntansi Dan Keuangan, 9(1), 29–38. https://dx.doi.org/10.31294/moneter.v9i1.12496.

Margret, J. E., & Peck, G. (2014). Fraud in Financial Statements (2nd ed.). Routledge.

Marheni, D. K., & Suryati. (2021). Analysis of Financial Stability Factors, Financial Targets, External Pressure, Inefficient Monitoring and Rationalization of The Financial Statements Fraud. Almana: Jurnal Manajemen Dan Bisnis, 5(2), 241–248. https://doi.org/10.36555/almana.v5i2.1626

Maulidiana, S., & Triandi, T. (2020). Analysis of Fraudulent Financial Reporting Through the Fraud Pentagon Theory. Advances in Economics, Business and Management Research, 143, 214–219. https://doi.org/10.2991/aebmr.k.200522.042.

Melati, P. M., & Suryowati, K. (2018). Aplikasi Metode Common Efect, Fixed Effect, dan Random Effect Untuk Menganalisis Faktor-faktor yang Mempengaruhi Tingkat Kemisikinan Kabupaten/Kota di Jawa Tengah dan Daerah Istimewa Yogyakarta. Jurnal Statistika Industri Dan Komputasi, 3(1), 41–51.

Nugraheni, N. K., & Triatmoko, H. (2017). Analisis Faktor-faktor yang Mempengaruhi Terjadinya Financial Statement Fraud: Perspektif Diamond Fraud Theory. Jurnal Akuntansi Dan Auditing, 14(2), 118–143. https://doi.org/10.14710/jaa.14.2.118-143.

Ozcelik, H. (2020). An Analysis of Fraudulent Financial Reporting Using the Fraud Diamond Theory Perspective: An Empirical Study on the Manufacturing Sector Companies Listed on the Borsa Istanbul. Grima, S., Boztepe, E. and Baldacchino, P.J. (Ed.) Contemporary Issues in Audit Management and Forensic Accounting (Contemporary Studies in Economic and Financial Analysis, Vol. 102), Emerald Publishing Limited, Leeds, pp. 131-153. https://doi.org/10.1108/S1569-375920200000102012).

Septriani, Y., & Handayani, D. (2018). Mendeteksi Kecurangan Laporan Keuangan dengan Analisis Fraud Pentagon. Jurnal Akuntansi, Keuangan Dan Bisnis, 11(1), 11–23. http://jurnal.pcr.ac.id/index.php/jakb.

Skousen, C. J., Smith, K. R., & Wright, C. J. (2009). Detecting and predicting financial statement fraud: The effectiveness of the fraud triangle and SAS No. 99. Advances in Financial Economics, 13, 53–81. https://www.emerald.com/insight/content/doi/10.1108/S1569-3732(2009)0000013005/full/html.

Sudjono, A. C. (2023). Do Good Corporate Governance and Whistleblowing Systems in Bank Industry Effectively Support Fraud Detection and Prevention? Asia Pacific Fraud Journal, 8(1), 155–168. https://doi.org/10.21532/apfjournal.v8i1.296.

Sukmadilaga C, Winarningsih S, Handayani T, Herianti E, Ghani EK. Fraudulent Financial Reporting in Ministerial and Governmental Institutions in Indonesia: An Analysis Using Hexagon Theory. Economies. 2022; 10(4):86. https://doi.org/10.3390/economies10040086.

Sunardi, & Amin, M. N. (2018). Fraud Detection of Financial Statement by Using Fraud Diamond Perspective. International Journal of Development and Sustainability, 7(3), 878–891.

Tarjo, T., Anggono, A., & Sakti, E. (2021). Detecting Indications of Financial Statement Fraud: A Hexagon Fraud Theory Approach. AKRUAL: Jurnal Akuntansi, 13(1), 119–131. https://doi.org/10.26740/jaj.v13n1.p119-131.

Wahyudi, I., Boedi, S., & Kadir, A. (2022). Kecurangan Laporan Keuangan (Fraudulent) Sektor Tambang di Indonesia. KRISNA: Kumpulan Riset Akuntansi, 13(2), 180–190. https://doi.org/10.22225/kr.13.2.2022.180-190.

Wahyuni, & Budiwitjaksono, G. S. (2017). Fraud Triangle Sebagai Pendeteksi Kecurangan Laporan Keuangan. Jurnal Akutansi, 21(1), 47–61. https://doi.org/10.24912/ja.v21i1.133.

Zhao, Z. & Bai, T. (2022). Financial Fraud Detection and Prediction in Listed Companies Using SMOTE and Machine Learning Algorithms. Entropy, 24, 1157. https://doi.org/10.3390/e24081157.

Downloads

Published

2024-10-05

How to Cite

Santini, G. J., & Maha Putra, D. (2024). DETECTION OF FINANCIAL STATEMENT FRAUD: STUDY IN INDONESIA BANKING AND ENERGY SECTOR COMPANIES. International Journal of Economics, Business and Accounting Research (IJEBAR), 8(3). https://doi.org/10.29040/ijebar.v8i3.13797

Issue

Vol. 8 No. 3 (2024): IJEBAR, VOL. 8, ISSUE 3, September 2024

Section

Articles

Citation Check

License

Authors who publish with IJEBAR agree to the following terms: Authors retain copyright and grant the IJEBAR right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC BY-SA 4.0) that allows others to share (copy and redistribute the material in any medium or format) and adapt (remix, transform, and build upon the material) the work for any purpose, even commercially with an acknowledgement of the work's authorship and initial publication in IJEBAR. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in IJEBAR. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).