Fraud Diamond Analysis In Fraudulent Financial Statement Detection Using Beneish M-Score

Meri Kristianti,Carmel Meiden

doi:10.35448/jrat.v14i2.12694

Meri Kristianti, Carmel Meiden

Open Access

https://doi.org/10.35448/jrat.v14i2.12694

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Abstract

Companies, especially go public companies, tend to want to display financial statements that look healthy and profitable to attract the attention of investors and potential investors . Therefore, sometimes companies commit fraud in financial statements to fulfill these objectives. This study was conducted to empirically test whether the fraud diamond element has an effect on the possibility of fraudulent financial statements in manufacturing sector companies listed on the Indonesia Stock Exchange in 2017-2019 with the Beneish M-Score as a proxy for the dependent variable. There are 120 total samples obtained by purposive sampling method with analytical techniques using descriptive statistical tests and logistic regression tests. The results of this study indicate that the nature of industry and rationalization variables have a positive and significant effect on the possibility of fraudulent financial statements, but for the variables of financial stability, external pressure, personal financial need, financial target, ineffective monitoring and capability, it is not proven to have a significant effect on the possibility of fraudulent financial statements.

Highlights

(Ikatan Akuntan Indonesia, 2015) defines financial statements as a structured presentation of the financial position and financial performance of an entity
The results of this study indicate that the nature of industry and rationalization variables have a positive and significant effect on the possibility of fraudulent financial statements, but for the variables of financial stability, external pressure, personal financial need, financial target, ineffective monitoring and capability, it is not proven to have a significant effect on the possibility of fraudulent financial statements
The purpose of the study is to determine whether financial stability, external pressure, personal financial need, financial target, nature of industry, ineffective monitoring, rationalization have a positive effect on the possibility of fraudulent financial statements and whether capability have an effect on the possibility of fraudulent financial statements

Summary

Introduction

(Ikatan Akuntan Indonesia, 2015) defines financial statements as a structured presentation of the financial position and financial performance of an entity. The purpose of making financial statements in general is to provide information for users of financial statements for making economic decision. Financial statements become one of the main guidelines of stakeholders in decision making, so that clean, trustworthy and reliable financial statements are very important. According to (Indonesian Institute of Certified Public Accountants, 2014) fraudulent financial reporting includes intentional misstatement including the omission of an amount or disclosure in the financial statements to influence the perception of users of financial statements. Fraud in financial statements that is generally carried out is overstatement of profit. The detection of factors that influence fraudulent financial statements in this study uses the analysis of the fraud diamond theory. The object of this study is a company listed in the manufacturing sector on the Indonesia Stock Exchange for the 2017-2019 period

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