Articlediamond2019

Do The Fraud Triangle Components Motivate Fraud In Indonesia?

Fauziah Aida Fitri · Muhammad Syukur · Gita Justisa

52 citations0/0 files storedAustralasian Accounting Business and Finance Journal

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Auditing, Earnings Management, Governance Corporate Governance and Financial Management Benford’s Law and Fraud Detection

Abstract

In present day Indonesia, cases of frauds are rarely covered by the media. Even though some fraud might not be material enough to be detected, the motivation for conducting fraud exist, especially when the internal systems have some leakage. The fraud triangle and the Beneish model are two well-developed theories to understand the motivations for fraud and to detect earnings manipulation in a business. Therefore, this empirical research aims to examine the applicability of the fraud triangle components combined with the M-score from Beneish model. The investigation involves panel data from 270 non-financial companies listed on IDX (Indonesia Stock Exchange) during 2013-2015. The results approved that companies with detected fraud received (1) higher pressure on financial stability, leverage, and financial targets; (2) lower numbers of independent commissioners and more receivables from special (related) parties, and (3) more frequent changes to auditors.

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References

2011Predicting Material Accounting Misstatements*1999The Detection of Earnings Manipulation 2000Fraudulent Financial Reporting: Consideration of Industry Traits and Corporate Governance Mechanisms 1954Other People's Money. A Study in the Social Psychology of Embezzlement 1954Other People's Money: A Study in the Social Psychology of Embezzlement.2010Fraud Auditing and Forensic Accounting 2009Detecting and predicting financial statement fraud: The effectiveness of the fraud triangle and SAS No. 99 2011Using Financial Statement Data To Identify Factors Associated With Fraudulent Financial Reporting

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2022Ethical values and auditors fraud tendency perception: testing of fraud pentagon theory 2023Fraud triangle and earnings management based on the modified M-score: A study on manufacturing company in Indonesia 2022Financial statement fraud in Indonesia: a longitudinal study of financial misstatement in the pre- and post-establishment of financial services authority

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