Whistleblowing framework and financial statement fraud: empirical evidence

Financial statement fraud is a scheme in which an employee intentionally causes a misstatement or omission of material information in a company's financial statements. This study aims to analyze the effect of Fraud Hexagon on Financial Statement Fraud and the effect of Green Competitive Advantage on financial statement fraud. This researcher also aims to analyze the role of the Audit Committee as a moderator of the effect of Fraud Hexagon and Green Competitive Advantage on Financial Statement Fraud. Based on the results of the study, it shows that financial targets have a significant effect on financial statement fraud. Accrual Ratio has a significant effect on financial statement fraud. Ineffective monitoring does not have a significant effect on financial statement fraud. Changes in directors do not have a significant effect on financial statement fraud. External pressure has a significant effect on financial statement fraud. Project cooperation has a significant effect on financial statement fraud. Green Competitive advantage does not have a significant effect on financial statement fraud. The Audit Committee strengthens the influence of Financial Targets on Financial Statement Fraud. The Audit Committee strengthens the influence of Accrual Ratio on Financial Statement Fraud. The Audit Committee does not strengthen the influence of Ineffective Monitoring on Financial Statement Fraud. The Audit Committee does not strengthen the influence of Changes in Directors on Financial Statement Fraud. The Audit Committee does not strengthen the influence of External Pressure on Financial Statement Fraud. The Audit Committee strengthens the influence of Project Cooperation on Financial Statement Fraud. The Audit Committee does not strengthen the influence of Green Competitive Advantage on Financial Statement Fraud.

Valuable guidance for staying one step ahead of financial statement fraud Financial statement fraud is one of the most costly types of fraud and can have a direct financial impact on businesses and individuals, as well as harm investor confidence in the markets. While publications exist on financial statement fraud and roles and responsibilities within companies, there is a need for a practical guide on the different schemes that are used and detection guidance for these schemes. Financial Statement Fraud: Strategies for Detection and Investigation fills that need. Describes every major and emerging type of financial statement fraud, using real-life cases to illustrate the schemes Explains the underlying accounting principles, citing both U.S. GAAP and IFRS that are violated when fraud is perpetrated Provides numerous ratios, red flags, and other techniques useful in detecting financial statement fraud schemes Accompanying website provides full-text copies of documents filed in connection with the cases that are cited as examples in the book, allowing the reader to explore details of each case further Straightforward and insightful, Financial Statement Fraud provides comprehensive coverage on the different ways financial statement fraud is perpetrated, including those that capitalize on the most recent accounting standards developments, such as fair value issues.

Financial statement fraud is a high incidence of fraud compared to corruption and misuse of assets. The purpose of this research is how audit quality, audit committees and financial statement fraud are, how much influence audit quality and audit committees have on financial statement fraud, how much influence audit quality has on financial statement fraud, how much influence the audit committee has on financial statement fraud. The purpose of this study was to determine the effect of audit quality and audit committee on financial statement fraud. The data source used in the study is secondary data from the annual financial statements the study used 240 sample data from 60 companies for 4 years of research. Sampling using non-probability sampling with purposive sampling technique. To measure the effect of the sample, the classic assumption test analysis and panel data regression analysis. The condition of audit quality, audit committees and financial statement fraud in manufacturing companies in the primary consumer goods sector in the sample is in poor condition. The research results show that audit quality has a negative and significant effect on financial statement fraud. Good audit quality can reduce financial statement fraud. Furthermore, the audit committee has no effect and not significant on financial statement fraud, a poor audit committee will increase financial statement fraud. The results of simultaneous testing show that audit quality and the audit committee jointly influence financial statement fraud.

Causes, consequences, and deterence of financial statement fraud

F raud in financial statements is a problem that cannot be underestimated. From year to year, cases of fraud are always found. In this case, the role of the auditor profession is needed to detect the possibility of fraud as early as possible, so as to prevent fraud and possibly prolonged scandals. When there is a material misstatement in the financial statements, the information is irrelevant as a basis for decision making because the analysis is not based on actual information. T hi s study aims to analyze the effect of pressure on indications of financial statement fraud, analyze the effect of opportunity on indications of financial statement fraud, analyze the effect of rationalization on indications of financial statement fraud and analyze the effect of capability on indications of report fraud. plantation companies listed on the Indonesia Stock Exchange. The sample in the study was 16 companies during the period 2015 to 2019. The analysis technique used logistic regression analysis. T h e results of the analysis show that pressure, which is proxied by ROA, has a significant effect on the indication of fraudulent company financial statements. The opportunity has a significant effect on the indication of fraud in the company's financial statements. Rationalization has no effect on indications of fraud in corporate financial statements. The capability has no effect on indications of fraudulent corporate financial statements.

Objective: The purpose of this study was to determine the effect of stimulus, capability, collusion, opportunity, rationalization, and ego on financial statement fraud moderated by the effectiveness of the board of commissioners which essential of corporate governance structure. This study also seeks to develop recommendations based on the analysis of financial statement fraud detection and empirically demonstrate the effectiveness of appropriate supervision in preventing financial statement fraud. Theoretical Framework: Management fraud in the context of the misstatement of financial information that can harm other parties for the sake of certain personal or group interests is referred to as a financial statement fraud. In recent years, the theory of financial statement fraud has developed, starting with the fraud triangle, fraud diamond, fraud pentagon, and fraud hexagon. The fraud hexagon theory expanded the previous theory by including the components of stimulus, capability, collusion, opportunity, rationalization, and ego. Furthermore, the model derived from the hexagon theory is known as the SCCORE model. Method: Quantitative research was developed to test the hypothesis in this study. The data observed is secondary data derived from the annual reports of publicly listed companies in the non-financial sector industry on the Indonesia Stock Exchange, which is the target population of the study. The sample was determined using the total sampling technique, and based on this, the observed data amounted to 529. The data were analyzed using multiple linear regression methods and moderated regression analysis methods processed with the SPSS program. Results and Discussion: The findings suggested that corporate governance could moderate the relationship among the SCCORE model and financial statement fraud. Additionally, according to the research findings, stimulus, collusion, opportunity, and ego affect financial statement fraud, even though capability and rationalization accomplish not. Research Implications: The theoretical implication of this research is to provide additional empirical evidence of fraud theory development into hexagon fraud, whereby collusion, which is proposed as an addition to the pentagon fraud theory, is proven to have an effect on financial statement fraud. The other theoretical implication is to empirically verify the relevance of agency theory to the oversight mitigation of the corporate governance structure. The practical implication of this research is to broaden the insights of practitioners in the accounting and finance fields in order to detect the likelihood of financial statement fraud based on historical financial data, which ultimately can assist in the financial decision-making process. Originality/Value: This study advanced to the state of knowledge on financial statement fraud through an inquiry into the interaction between the fraud hexagon theory's elements and corporate governance moderation, particularly the effectiveness of its oversight. The effectiveness of corporate governance in preventing financial statement fraud through appropriate oversight illustrates the study's relevance and value.

This study aims to examine the effect of financial targets, nature of industry and auditor changes on financial statement fraud with the audit committee as a moderating variable in manufacturing companies. The population of this study are manufacturing companies listed on the Indonesia Stock Exchange for the period 2015 - 2019. Data collected by purposive sampling method, obtained as many as 165 company data which became the research sample.The data used is secondary data in the form of annual reports of companies that are sampled for research. Data test tools using Eviews software include descriptive statistical analysis, classical assumption test, determination coefficient test, simultaneous significant test, and hypothesis testing. The results showed that the financial target variable had a positive effect on financial statement fraud. The nature of industry variable has no positive effect on financial statement fraud. The audit committee weakens the positive effect of financial targets on financial statement fraud. Audit quality does not weaken the positive effect of nature of industry variables and auditor changes on financial statement fraud. This study aims to examine the effect of financial targets, nature of industry and auditor changes on financial statement fraud with the audit committee as a moderating variable in manufacturing companies. The population of this study are manufacturing companies listed on the Indonesia Stock Exchange for the period 2015 - 2019. Data collected by purposive sampling method, obtained as many as 165 company data which became the research sample. The data used is secondary data in the form of annual reports of companies that are sampled for research. Data test tools using Eviews software include descriptive statistical analysis, classical assumption test, determination coefficient test, simultaneous significant test, and hypothesis testing. The results showed that the financial target variable had a positive effect on financial statement fraud. The nature of industry variable has no positive effect on financial statement fraud. The audit committee weakens the positive effect of financial targets on financial statement fraud. Audit quality does not weaken the positive effect of nature of industry variables and auditor changes on financial statement fraud.

Abstract. Cases of fraud that occurred in various countries imply that fraud is still common in companies and governments. The purpose of this study is to analyze the factors that influence the Fraud Financial Statement with Corporate Governance as a moderating variable. This type of research includes hypothesis testing using primary data in the form of a questionnaire with the research subject being an accountant registered as a member of the Indonesian Institute of Certified Public Accountants in Jakarta. The samples obtained were 110 respondents. Data is processed using SPSS. Methods of data analysis using multiple regression. The research results conclude that pressure has a positive effect on financial statement fraud; Competence has a positive effect on Financial statement fraud; Arrogance has a positive effect on Financial statement fraud; Integrity has a positive effect on Financial statement fraud; Corporate governance strengthens the influence of pressure on financial statement fraud; Corporate governance strengthens the influence of Competence on Financial statement fraud; Corporate governance weakens the influence of Arrogance on Financial statement fraud; and Corporate governance weakens the influence of integrity on financial statement fraud.

PurposeFinancial statement fraud has become a global concern, and auditors are increasingly focused on identifying and investigating it. Auditors may play a crucial role in investigating and reducing financial statement fraud, and this is particularly important in developing countries where fraudulent practices are more prevalent due to the lack of strict regulations and oversight. This study investigates whether enhanced audit quality has an impact on reducing financial statement fraud. The primary aim is to recognize whether a higher level of audit quality relates with a decrease in fraudulent activities in Indonesia, which is one such country that has not yet adopted IFRS.Design/methodology/approachThis study investigates the effect of audit quality, as measured by audit tenure, audit fee, and audit size, on the dependent variable of financial statement fraud, as indicated by Dechow F-value. The sample for this study comprises 951 observations from 2015 to 2020, and the research design utilizes a panel data approach. To test the main hypothesis, OLS, and GMM estimation techniques are employed.FindingsThe analyses reveal a negative relationship between audit tenure and financial statement fraud. This suggests that shorter audit tenure may be associated with an increased risk of financial statement fraud. This heightened risk could stem from auditors having limited time to thoroughly understand the company's operations and internal controls, potentially making it more challenging to detect and prevent fraudulent activities perpetrated by the client. Conversely, a positive relationship is identified between audit fees and financial statement fraud, suggesting that companies paying higher fees may be engaging auditors less adept at detecting fraudulent activities. Furthermore, a negative relationship is observed between Big-5 and financial statement fraud, which may be due to the greater resources, expertise, quality control, scrutiny, reputation, and ethical conduct of Big-5 audit companies.Research limitations/implicationsThis study only focused on listed companies in Indonesia, therefore, caution should be exercised when generalizing the findings to other developing and Muslim countries such as Malaysia. The findings may differ due to the adoption of IFRS in Malaysia. As such, it is important for future studies to include Malaysia as a sample and compare the results with those of Indonesia. This comparison would demonstrate the impact of IFRS adoption on the relationship between audit quality and financial statement fraud and provide insights for policy makers in Indonesia.Practical implicationsThe findings of this study have important implications for developing countries that have been shown to be more susceptible to fraud than developed countries. This study contributes to the existing research on the role of audit quality in reducing financial statement fraud and emphasizes the need for auditors and accountants to take a proactive approach in detecting and investigating financial fraud.Originality/valueThis study is a new study because it investigates the relationship between audit quality and financial statement fraud in Indonesia, a developing Muslim country that has not yet adopted International Financial Reporting Standards (IFRS). The study provides valuable evidence on the unique factors that influence fraud in Indonesia and fills a gap in the literature as previous studies on this topic have largely focused on developed countries. Additionally, the study recommends that policymakers in Indonesia consider implementing IFRS to improve the reliability of financial reporting and strengthen the effectiveness of the auditing process, thus reducing the incidence of fraud.

The Impact of Corporate Governance and Real Earnings Management on Financial Statement Fraud in Malaysia

This study aims to analyze financial leverage, liquidity and profitability of financial fraud statements in banking companies. Financial statement fraud (fraudulent financial statements) as an intentional or unintentional act or act, which causes financial statements to be materially misleading. The population used in this study is a banking company, while the sample used in this study is the financial statements of banking companies listed on the Indonesia Stock Exchange from 2015 - 2017. This research is a causative research, namely research designed to measure the relationship between variables research, or analyze the influence of a variable on other variables. Research design is a framework used in a study. The results of this research financial leverage have a significant effect on financial statement fraud. Liquidity has a significant effect on financial statement fraud. Profitability has no significant effect on financial statement fraud. Simultaneously financial leverage, liquidity and profitability together have a significant effect on financial statement fraud.

Since stakeholders of listed companies rely on the financial statement. However, prior studies pointed out that financial statement fraud is a significant cause of fraud among Thai-listed companies. This increases the risk for stakeholders’ decision-making. Thus, this study initially examines empirical evidence regarding financial statement fraud in line with the Fraud Diamond Theory in Thailand. It proposes to reflect factors of financial statement fraud that exist. The objectives of this study were 1) to analyze the factors of the Fraud Diamond Theory that influence financial statement frauds of listed companies in Thailand 2) to examine the effects of the Fraud Diamond Theory factors on the financial statements of listed companies in Thailand, and 3) to study the relationship between moderator variables, namely the size of the company and the risks of the industry, and the factors of the Fraud Diamond Theory influencing the financial statement fraud of listed companies on the Stock Exchange of Thailand. There were ten independent variables examined as factors influencing financial statement fraud. The independent variables were classified into four categories, pressure, opportunity, rationalization, and capability. This study applied a quantitative research approach. Secondary data were collected from 371 listed companies on the Stock Exchange of Thailand during the 2015–2020 period. There were 1,855 observations in total. The research used descriptive statistics and logistic regression analysis to prove the research hypotheses. The results revealed that 11.48 percent of the samples had a high probability of financial statement fraud. External pressures such as financial targets (ROA), rationalizations such as accrual (ACCRUAL), and the moderator variable, industry risk (IND), influenced the financial statement fraud on the Stock Exchange of Thailand at a statistical significance level of 0.05. On the other hand, the other eight independent variables and the moderator variable, the size of the enterprise, had no significant influence on financial statements fraud on the Stock Exchange of Thailand.

This study aims to find out and provide empirical evidence regarding the influence of financial stability, audit quality and company complexity on financial statement fraud in sector financials sub-sector banks listed on the Indonesia Stock Exchange in 2019-2023. The independent variables in this study are financial stability which is proxied by the asset change ratio (ACHANGE), audit quality measured by discretionary accruals proxies, and company complexity as measured by the number of subsidiaries. The dependent variable in this study is financial statement fraud as measured by the Beneish M-Score. This type of research is quantitative. This research uses secondary data in the form of annual financial statements from the Indonesia Stock Exchange (IDX). The population in this study is sector financials sub-sector banks listed on the Indonesia Stock Exchange in 2019-2023. The sampling technique in this study used the purposive sampling method and was obtained from 15 companies with a span of 5 years, so that the data processed was as many as 75 data samples. The data analysis technique in this study uses the multiple linear analysis method and the data analysis tool in this study uses the Eviews 12 Student Version software program. The results of the study show that (1) financial stability has an effect on financial statement fraud, (2) audit quality has a significant negative effect on financial statement fraud, (3) company complexity has no effect on financial statement fraud, (4) financial stability, audit quality and company complexity simultaneously have a significant effect on financial statement fraud.

This study aims to analyze the effect of the fraud pentagon theory components on financial statement fraud with the quality of the audit committee as a moderator. This study was conducted on banking sector companies listed on the IDX in 2012-2022. The population of this study was all banking sector companies listed on the IDX, totaling 47 banks. The sampling method used purposive sampling which resulted in 23 companies used as samples. Data analysis was carried out on secondary data using the SEM-PLS analysis technique. The results of this study indicate that financial stability and managerial ownership have a positive effect on financial statement fraud in banking companies listed on the Indonesia Stock Exchange (IDX) for the 2012-2022 period. Furthermore, the board of commissioners has a significant (real) negative effect on financial statement fraud in banking companies listed on the Indonesia Stock Exchange (IDX) for the 2012-2022 period, while changes in auditors are unable to affect the presence or absence of financial statement fraud in banking companies listed on the Indonesia Stock Exchange (IDX) for the 2012-2022 period. Furthermore, the quality of the audit committee is a moderating variable that weakens the influence of financial stability and managerial ownership on financial statement fraud in banking companies listed on the Indonesia Stock Exchange (IDX) for the period 2012-2022. Meanwhile, the quality of the audit committee is a moderating variable that strengthens the negative influence of the board of commissioners on financial statement fraud. However, the quality of the audit committee cannot moderate the effect of auditor changes on financial statement fraud. This means that the presence or absence of audit committee quality cannot weaken or strengthen the effect of auditor changes on financial statement fraud.

A financial statement fraud model based on synthesized attribute selection and a dataset with missing values and imbalanced classes