Detecting Financial Statement Fraud through Hexagon Theory with Audit Committee as Moderating in Mining Companies
Corresponding Author(s) : Krisdiyanto Pujoningrum
Prosiding International Conference on Sustainable Innovation (ICoSI),
Vol. 3 No. 2 (2023)
Abstract
Based on the ACFE Indonesia survey (2019), the most costly fraud in Indonesia is corruption, with a percentage of 70% of the total loss of IDR 373.65 billion, misuse of state and company assets of 21% of IDR 257.52 billion, and financial statement fraud 9% of IDR 242.26 billion. These results show that the value of losses caused by financial statement fraud has a high level with the lowest percentage of cases. Previous studies that discuss the detection of financial statement fraud have inconsistent results. This study aimed to provide evidence regarding the effect of fraud hexagons on financial statement fraud and the audit committee in moderating the relationship between the independent and dependent variables. The sampling technique used a purposive sampling method and data collection with documentation. The population comprises 52 mining companies listed on the Indonesia Stock Exchange in 2019 - 2021. Samples with research criteria were obtained from 123 analysis units. The analysis tool uses panel data regression. The results showed that financial targets, political connections, the nature of the industry, and CEO duality affect financial statement fraud. At the same time, the change of directors and CEO duality does not affect financial statement fraud. Then, the audit committee can reduce the impact of financial targets, political connections, and CEO duality with financial statement fraud. However, the audit committee cannot control the change of directors, the nature of the industry, and auditor turnover. This study provides empirical evidence for information users in financial statement fraud.
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