Auditor Changes Research Articles

Fraudulent Financial Reporting and Fraud Hexagon: Evidence from Infrastructure Companies in ASEAN

"This study aims to analyse the factors that may influence fraudulent financial reporting using the fraud hexagon model. The subjects of this study are the infrastructure sector companies listed on the stock exchanges of every ASEAN country for the period of 2019-2021. This study uses logistic regression with F-Score as the measurement for the dependent variable. The result of this study suggests that financial target, change in BOD, and CEO’s education affect fraudulent financial reporting. While financial stability, external pressure, e-procurement, electronic whistle blowing system, change in auditor, and CEO’s military or political connection do not affect fraudulent financial reporting. This study advances the knowledge of variables that may influence fraudulent financial reporting using a few new proxies for the fraud hexagon’s element, namely the e-procurement, electronic whistle blowing system, CEO’s education, and CEO’s military or political connection. The findings of this study have provided several practical implications for the company’s stakeholders to prevent fraudulent financial reporting. In the context of the fraud hexagon, this research is the first study to date that can show the significant and positive relationship between CEOs’ education and fraudulent financial reporting. The limitations of this study are the short observation period and the low R-square of the model."

Pengaruh Tekanan, Kesempatan, Rasionalisasi, dan Kemampuan terhadap Kecurangan Laporan Keuangan: Studi Empiris BUMN yang Terdaftar di BEI Tahun 2018-2020

This research is that aims to investigate the effects of diamond fraud elements (pressure, opportunity, rationalization, and capability) on detected fraudulent financial reporting. This study provide the influence of the pressure proxied by financial stability, external pressure, and financial target, the opportunity proxied by nature of industry, the rationalization proxied by change in auditor, and the capability proxied by change in director. The test is performed by using multiple linear regression on the 60 data samples of BUMN on Indonesia Stock Exchange in the period 2018-2020. In line with there was R2 of 0,829 or 82,9%. It mean the contribution from pressure, opportunity, rationalization, and capability is 82,9% while the rest of 17,1% was explained by other variables outside the research. The results show that financial target variable proved to be significantly positive have an effect on fraudulent financial reporting, while external pressure and change in auditor variable proved to be significantly negative, and financial stability, nature of industry, and change in director had no effect on fraudulent financial statements.

Pengaruh Fraud Diamond Terhadap Kecenderungan Kecurangan Laporan Keuangan Yang Terdaftar di BEI Tahun 2019-2021

This research aims to determine the effect of fraud diamonds on the tendency for fraudulent financial reports in Manufacturing Companies in the Consumer Goods Industry Sub-Sector listed on the IDX in 2019-2021. This research was conducted using the associative causal method. The sample selection in this study used a purposive sampling method, with the sample criteria being the financial reports of 10 companies in the Consumer Goods Industry Sub-Sector Manufacturing Company registered on the IDX in 2019-2021. This research data was obtained from literature and documentation studies, data analysis techniques were obtained from IBM SPSS statistics version 26. Data analysis used in this research is, descriptive statistics, classical assumption tests using normality tests, autocorrelation tests, multicollinearity tests and heteroscedasticity tests, analysis multiple linear regression, hypothesis testing using partial test (t), simultaneous test (f) and coefficient of determination test (R2). The results of the research partially show that external pressure and ineffective supervision have proven to have a positive effect on financial report fraud. Meanwhile, the financial target variables, change of auditor, change of director were proven to have no positive effect on financial statement fraud. The variables pressure, opportunity, rationalization and ability simultaneously have a significant effect on financial statement fraud at a significant level of 5%. In this research, the fraud variable is explained by independent variables by 31.3%, the remaining 68.7% is explained by other external factors which are not in this study.

Contingencies and auditor turnover on audit report lag

This study aims to examine the effect of contingencies, and auditor turnover on audit report lag. The population of this study are property and real estate companies listed on the Indonesia Stock Exchange (IDX) for the period 2020-2023. A sample of 32 companies with 128 observations was obtained using purposive sampling method. The research data is secondary data and is obtained by non-participant observation method. The analysis technique used is multiple regression analysis using the MRA (Moderated Regression Analysis) test. The results showed that contingencies had a positive effect in causing a longer audit report lag, while auditor changes had no effect on audit report lag.

Fraud Pentagon Analysis In Detecting Fraudulent Financial Reporting Using Beneish M-Score Model (On Banking Companies Registered In Indonesia Stock Exchange (Bei) In 2014-2018)

This study aims to detect Fraudulent Financial Reporting as measured using the Beneish M-Score that occurred in banking companies listed on the Indonesia Stock Exchange in 2014-2018 using seven independent variables, namely Financial targets, External pressure, Financial stability, Ineffective monitoring, Rationalization, Capability and Arrogance. The research sample used was 140 of 28 banking companies listed on the Indonesia Stock Exchange in 2014-2018. The type of data used is secondary data in the form of financial reports and company annual reports. The analysis technique used in this study is multiple linear regression analysis where previously the data was tested using the classical assumption test consisting of a normality test, multicollinearity test, autocorrelation test and heteroscedasticity test. The results of this study indicate that the external pressure variable is proxied by Leverage Ratio (LEV), Financial stability is proxied by Asset Changes (ACHANGE), Ineffective monitoring is proxied by the proportion of independent commissioners (IND), and Change in board of directors is proxied by changes in the position of the board of directors (DCHANGE) can detect fraudulent financial reporting. Meanwhile, the Financial Target variable which is proxied by Return On Assets (ROA), Razionalization which is proxied by External Auditor Change (AUDCHANGE) and Arrogance which is proxied by the Number of CEO Photos (CEOPIC) are unable to detect fraudulent financial reporting. Simultaneously all the variables in this study were able to detect fraudulent financial reporting

THE EFFECT OF THE FRAUD TRIANGLE IN DETECTING FRAUDULENT FINANCIAL REPORTING IN INDONESIAN BANKING SECTOR COMPANIES

This research aims at finding out the influence of factors in fraud triangle theory towards fraudulent financial reporting in banking companies in Indonesia. Research sample was chosen by using some criteria that consist of banking sector companies registered and listed in Indonesian Stock Exchange & Bank Based on Business Activity II, III, IV group from 2017 to 2019. These criteria chose 37 banks as sample processed by e-Views 12 and Microsoft Excel application. Fraud triangle theory divides three fraud factors: pressure, opportunity, and rationalization. Pressure factor includes external pressure and financial target. Opportunity factor is reflected by monitoring variable, and rationalization factor consists of auditor change and accrual method variable. Research results show that independent variables gave significant impact to dependent variable, except for monitoring and auditor change variable.

Retain or Rotate: The Association between Frequent Auditor Switching and Audit Quality

SYNOPSIS Regulators have long expressed concerns about auditor changes and the detrimental impact of opinion shopping on the audit market. Whereas prior studies have examined how single-instance auditor switching impacts audit outcomes, we examine whether frequent auditor switching impacts audit outcomes. We find that more frequent auditor switching is associated with lower audit quality, but that this effect is mitigated in the presence of higher internal and external monitoring. We also find that frequently switching companies have lower audit quality than companies that switch auditors, but do not frequently switch auditors. Taken together, our evidence indicates that a subset of companies participates in frequent auditor switching and that such behavior is detrimental to the audit market. Our findings can inform regulators and practitioners about some of the ramifications of frequent auditor switching and help inform auditor switching regulations and client acceptance procedures.

Analisis Fraud Pentagon Dalam Mendeteksi Kecurangan Laporan Keuangan (Studi Kasus Pada Perusahaan Sektor Healthcare Yang Terdaftar Di Bursa Efek Indonesia Tahun 2021)

This study aims to determine the effect of pentagon fraud in detecting financial statement fraud in healthcare sector companies listed on the Indonesia Stock Exchange in 2021. The method used in this research is quantitative in nature causative with data sources in the form of secondary data. The sample of this research is 21 companies in the healthcare sector using a purposive sampling method. The data for this research were obtained from literature and documentation. The results of this study show that partially financial target variables and changes in directors have an effect on fraudulent financial reports in healthcare sector companies listed on the Indonesia Stock Exchange in 2021. Meanwhile, external pressure variables, ineffective supervision, auditor changes, and the frequency of CEO photos appearing have no effect on fraudulent financial statements in healthcare sector companies listed on the Indonesia Stock Exchange in 2021. Simultaneously financial targets, external pressures, ineffective supervision, changes in auditors, changes in directors, and the frequency of CEO photos appearing have an effect on fraudulent financial statements.

How do auditor attributes affect bank earnings management? Evidence from Africa

PurposeThis paper aims to examine the impact of the auditor's characteristics on bank's earnings management (EM) through loan loss provisions (LLP) for African banks.Design/methodology/approachThis study is based on 360 bank-year observations from 14 African countries for the period 2011–2016, discretionary LLP is used as proxy for EM. Panel regressions have been conducted.FindingsThe authors' findings reveal that auditor's industry specialization and tenure exert a negative and significant influence on the extent of LLP-based EM. The results also show that total fees paid to the banks' auditors are positively related to the extent of EM. In a further analysis, the authors find that industry specialist auditors are more effective in reducing the incoming-increasing. Similarly, the positive relationship previously found between EM and total fees still holds only for income-increasing. Moreover, auditor tenure negatively impacts both income-increasing and income-decreasing EM. As for auditor change, results reveal differential effect on EM.Originality/valueThe current research extends prior literature and provides an understanding of an important external monitoring mechanism, the external audit, within African banks. To the best of the authors' knowledge, there is a paucity of cross-country studies that has addressed the influence of auditors' attributes on banks' EM in Africa.

Relevansi Fraud Hexagon Theory terhadap Kecurangan Laporan Keuangan Pada Sektor Perbankan di Indonesia Tahun 2017-2021

This research aims to analyze the relevance of Fraud Hexagon Theory to financial statement fraud in the banking sector in Indonesia in 2017-2021. Agency theory explains that management has the ability to gain a lot of benefits for itself, so that management no longer acts in the interests of the principal, one way is through collusion. This research shows that financial target, external pressure, financial stability, director change, CEO photo change, and e-procement have a positive and significant effect on financial report fraud, while change in auditor and ineffective monitoring have a negative and insignificant effect on financial report fraud.

Credit default swaps, investor protection, and audit cost: international evidence

PurposeCredit Default Swap (CDS) trading alters equilibrium interactive monitoring of external corporate monitors due to a possible change in private lenders' incentive to monitor client firms. This study explores how audit fees change in response to CDS trade initiation on client firms and how this effect is moderated by investor protection.Design/methodology/approachWith 6,052 cross-country firm observations, the author conducts estimations in the systems dynamic general methods of moments framework.FindingsThe author documents that audit fees rise on average after CDS trade initiations with and/or without investor protection. Meanwhile, change in auditors' risk perception result in increased audit costs when CDS trade initiation and investor protection interact. The effect of CDS trading on audit fees remain after controlling for firm, audit, and auditor features are robust to different proxies of audit cost.Practical implicationsThe need for firms in high investor protection jurisdictions to initiate CDS trade to implement policies in order to maximize their gains from investor protection activities to lessen the overall impact of any increased audit cost that may arise. Furthermore, CDS regulation may be strategically targeted to lessen the effect of increased audit costs on firms after initiation. This would ensure that the resulting increase in audit cost may not materially impact the cash or profitability position of such firms.Originality/valueThis study is distinct from previous ones by focusing on variation in private lenders incentive to monitor after CDS trade initiation after controlling for possible monitoring by short-term creditors. Given that monitoring is not costless for private lenders and CDS trading on their borrowers causes a change in this cost structure, the author documents how auditors react to such changes in incentive to monitor.

Analisis Fraud Pentagon Terhadap Kecurangan Laporan Keuangan (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia Tahun 2019-2021)

This study examines the effect of financial targets, nature of the industry, change in auditor, change of directors, and frequent number’s of CEO on fraudulent financial reporting. The populationHused is a manufacturing companyIthat has been listed on the Indonesia Stock Exchange (IDX) for the 2019-2021 period. The data collection technique used in this study used a purposive sampling method with a sample of 65 companies. Data analysis method used in this study were descriptive statistical analysis and logistic regression analysis using SPSS 21. The results of this study indicate that financial targets have a significant positife effect on fraudulent financial statements. Nature of the industry and change of directors don’t have a significant positife effect on fraudulent financial statements. changes in auditors and frequent number’s of CEO don’t have a significant negative effect on fraudulent financial statements.
 Keyword : fraud pentagon, fraudulent financial statements

Pendeteksian Financial Statement Fraud dengan Menggunakan F-Score Model : Perspektif Fraud Pentagon Theory

This study aims to determine the partial effect of financial stability, financial targets, ineffective of monitoring, quality of external audit, change in auditors, change in directors, frequency number of CEO's picture on financial statement fraud in mining companies listed on the IDX. 2021. This study used a quantitative approach and the sample collection method in this study used purposive sampling and obtained as many as 18 companies as samples. The type of data used in this study is secondary data sourced from the company's financial reports and annual reports obtained directly from the Indonesia Stock Exchange (IDX). The data analysis method used is multiple regression analysis which is processed using the SPSS program. Based on the results of research conducted on 18 mining sector companies for the 2020 and 2021 periods it concluded that the financial stability variable as measured by ACHANGE did not have a significant effect on financial statement fraud, the financial target variable as measured by ROA had a significant effect on financial statement fraud, the ineffective variable of monitoring measured by BDOUT has no significant effect on financial statement fraud, the quality of external audit variable as measured by AUD has no significant effect on financial statement fraud, the change in auditor variable as measured by CPA has no significant effect on financial statement fraud, the change in director variable as measured with DCHANGE it has no significant effect on financial statement fraud and the frequency number of CEO's picture variable has no significant effect on financial statement fraud.

THE EFFECT OF FRAUD HEXAGON ON FINANCIAL STATEMENT FRAUD IN PROPERTY AND REAL ESTATE SECTOR COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE (IDX) IN 2017-2021

This research aims to determine the effect of hexagon fraud proxied by external pressure, change in directors, political connections, nature of industry, change in auditors and frequent number of CEO picture on financial statement fraud. This research uses quantitative research methods. The sample in this study was selected using a purposive sampling technique which obtained 13 property and real estate sector companies listed on the Indonesia Stock Exchange in 2017-2021 with a total sample of 65. Data collection techniques in this study using documentation techniques and library research. The data collected is the company's financial reports and annual reports. Data analysis technique used logistic regression analysis with Eviews 12 software. The results showed that external pressure, nature of industry and change in auditors had an effect on financial statement fraud, while changes in directors, political connections, and frequent number of CEO picture had no effect on financial statement fraud.

Determinants of Financial Statement Fraud in Perspective Hexagon Fraud Theory

The purpose of this research is to analyze the effect of the hexagon fraud theory; stimulus, opportunity, rationalization, capability, ego, collusion, company size on financial statement fraud in energy sector companies listed on the Indonesia Stock Exchange in 2016-2020 using the F-Score model as a measurement. This study uses a sample of 39 energy sector companies with a total of 186 observations. This study uses multiple regression analysis techniques. The results of this study indicate that the stimulus (pressure) in terms of financial targets and external pressure and opportunity in terms of the nature of industry affects financial statement fraud. While rationalization in terms of change in auditors, capability in terms of change in directors, ego (arrogance) in terms of CEO duality, collusion in terms of market performance ratios, and company size have no effect on financial statement fraud.

Earnings Management, Auditor Changes and Ethics: Evidence from Companies Missing Earnings Expectations

Earnings Management, Auditor Changes and Ethics: Evidence from Companies Missing Earnings Expectations

Literature Review: Fraud Triangle Trends In Indonesia During 2016-2021

Fraud is one of the behaviors that are a problem in every country, both in developing and developed countries. This study aims to review financial statement fraud research development to provide findings on financial statement fraud trends in Indonesia. Researchers used a qualitative method with literature review techniques on several journals indexed by google scholar, garuda, sinta 2, and sinta 4 during 2016-2021 in Indonesia. The total number of studies reviewed was 15 journals. This study concludes that the three elements of the fraud triangle impacted financial statement fraud for eight company sectors during 2016-2021. Pressure, followed by opportunity and rationalization, has the most substantial impact on financial statement fraud. Meanwhile, external pressure, organizational structure, change in auditor, and auditor opinion do not affect the occurrence of financial statement fraud. These findings open up opportunities for future research to present literature on studies with a broader range of sectors and other fraud analyses (fraud diamond, fraud pentagon, and fraud hexagon) in Indonesia. This research aims to provide findings in a literature review of financial statement fraud trends in Indonesia.

The Effect of Auditors Change on Corporate Tax Burden

The Effect of Auditors Change on Corporate Tax Burden

Impact of Audit and Financial Factors on Audit Report Lag: Evidences from Indonesian

Financial report relevance, which is one of the qualitative features of financial reports, can be affected by audit report lag. Less pertinent is the audited financial report of a local government the longer the audit report is delayed. Thus, the user of a local government financial report may experience negative consequences. This study’s objective was to examine empirical evidence about the influence of audit results, auditor switches, local government size, leverage, and profitability on local government audit report lag in Indonesia. This study utilized 506 out of 514 local governments (districts and cities) in Indonesia during 2017 and 2018, with a total sample size of 1,012. This study utilized secondary data collected from 2017 to 2018 audit reports of the Supreme Audit Institute – SAI (BPK). The data was collected from the electronic database services of the Information and Documentation Executive Authority (E-PPID) at http://e-ppid.bpk.go.id. The Purposive Sampling Technique was used to acquire the sample, and the data was analyzed using Ordinary Least Squares (OLS). According to the research, audit findings, local government size, and leverage influenced local government audit report latency, but auditor changes and profitability had no significant effect. Many variables, including audit opinion, audit quality, auditor experience, the quantity of capital expenditures, special allocation funds received by local government, and the qualifications of the local government report compiler, might be investigated further. In addition, splitting municipal governments depending on island location would provide for an intriguing extra audit report lag study.

Analisis Pengaruh Ceo Turnover, Opini Audit dan Pertumbuhan Perusahaan terhadap Auditor Switching dengan Financial Distress sebagai Variabel Moderasi

Purpose: This study aims to examine and analyze the effect of CEO Turnover, Audit Opinion, Company Growth on auditor switching with financial distress as a Moderating Variable. Methodology/approach: The type of data used in this study is secondary data, in the form of financial reports and annual reports. The population in this study are all property and real estate companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period. Sample data were obtained by purposive sampling method with the features of voluntary auditor changes or under 6 years. So that the final number of samples obtained was 140 data. The data analysis technique used is logistic regression analysis. Results/findings: The research results show (1) CEO Turnover has a positive effect on auditor switching (2) Audit opinion has no effect on auditor switching (3) Company growth has no effect on auditor switching (4) Financial Distress has a positive effect on auditor switching (5) Financial Distress strengthens the influence CEO turnover on auditor switching (6) financial distress is not able to influence the effect of audit opinion on auditor switching (7) financial distress is not able to moderate the effect of company growth on auditor switching.