Abstract
This study was aimed to prove the research hypothesis that there are effects of financial ratios, which consist of profitability, leverage, and liquidity on the financial statements fraud risk, and the quality of auditors are able to moderate the relationship between financial ratios to financial statements fraud. This study uses a population of manufacturing companies that publish their financial statements on the Indonesian Stock Exchange in 2016-2017 will also be summarized and inferred. This study uses purposive sampling so that the study sample amounted to 275 firm years. The dependent variable uses the financial statements fraud risk with the proxy Dechow F-score. The independent variable in this study consisted of profitability with ROA ratio, leverage using the calculation of the ratio of total liabilities to total assets, and liquidity using the calculation of the ratio of total current assets to current liabilities. The moderating variable in this study is auditor quality as a moderating variable with a dummy variable. The Hypothesis test conducted is using moderated regression analysis (MRA). The results of this study indicate that the financial statements fraud risk is influenced by financial liquidity ratios, while financial ratios of profitability and leverage have not been proven to affect financial report fraud. This study provides a contribution by providing evidence that the quality of auditors can suppress fraudulent actions on financial statements with low profitability. This research provides information to regulators to pay more attention to companies that experience liquidity problems, and become input for regulators to make rules that improve the quality of auditors.
Highlights
Fraud is a common concern for various parties such as company management and regulators
These results showed the manufacturing companies in Indonesia for the period 2016 to 2017, the higher profitability of the company which following the higher risk of financial statements fraud
This result becomes the good news for the company because by using a qualified auditor it will provide a positive signal for the company to investors since it is proven to minimize the risk of financial statements fraud
Summary
Fraud is a common concern for various parties such as company management and regulators. The three types of fraud could be a disadvantage to the company, and financial statements fraud has a high median loss. These results indicate the high impact of financial statement fraud and became a serious problem for the market and the economy (Albrecht, et al, 2012: 360). Financial statements fraud in Indonesia proved to have a high median loss, because most of the median losses were more than 10 billion rupiahs (ACFE Indonesia Chapter, 2017: 15). This case was determined with the fraud triangle theory can show because of the pressure of poor financial performance
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
