Financial Target, Nature of Industry, Change in Auditors, Change in Directors regarding Financial Fraud and Audit Quality as Moderating Variables
Abstract
Audits are conducted to ensure that the information in financial statements is accurate and to provide users with confidence in management's accountability. However, financial statements still contain errors due to incomplete or biased reporting, or fraud. The 2022 ACFE results show that Indonesia ranks fourth among the four most fraudulent countries in the Asia-Pacific. In Indonesia, there were 23 cases of fraud, with 6.7 percent of these cases involving financial statement fraud. This indicates that management continues to commit fraud in financial reporting. Therefore, the purpose of this study is to examine the influence of financial targets, industry nature, changes in directors, and auditor changes on financial fraud. This study will utilize data from 13 state-owned enterprises listed on the Indonesia Stock Exchange. The results show that the moderating effect of audit quality weakens the influence of financial targets, industry nature, changes in directors, and auditor changes on financial fraud.
References
Achmad, T., Ghozali, I., & Pamungkas, I. D. (2022). Hexagon fraud: Detection of fraudulent financial reporting in state-owned enterprises Indonesia. Economies, 10(1), 13.
Ahern, K. R., & Peress, J. (2023). The role of media in financial decision-making (pp. 192-212). Edward Elgar Publishing.
Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015). Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of organizational effectiveness: People and performance, 2(1), 7-35. https://doi.org/10.1108/JOEPP-08-2014-0042
Amyulianthy, R., Astuti, T., Wahyudi, A., Harnovinsah, H., Sopanah, A., & Sulistyan, R. B. (2023). Diamond Fraud Determinants: An Implementation of Indonesia’s Wisdom Value. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 8(8), 33.
Amyulianthy, R., Astuti, T., Wahyudi, A., Harnovinsah, H., Sopanah, A., & Sulistyan, R. B. (2023). Diamond Fraud Determinants: An Implementation of Indonesia’s Wisdom Value. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 8(8), 33. https://doi.org/10.26668/businessreview/2023.v8i8.2938
Anjani, P. (2023). Enhancing transparency and trust through effective financial statement audits. Advances in Managerial Auditing Research, 1(3), 103-113. https://doi.org/10.60079/amar.v1i3.228
Aprilia, A. (2017). Analisis pengaruh fraud pentagon terhadap kecurangan laporan keuangan menggunakan beneish model pada perusahaan yang menerapkan asean corporate governance scorecard. Jurnal ASET (Akuntansi Riset), 9(1), 101-132.
Ashma, F. U., & Laksmi, A. C. (2023). Corporate Social Responsibility dan Stabilitas Keuangan terhadap Financial Fraud: Peran Moderasi dari Kualitas Audit. Reviu Akuntansi dan Bisnis Indonesia, 7(1), 134-152. https://doi.org/10.18196/rabin.v7i1.17739
Aviantara, R. (2021). The Association Between Fraud Hexagon and Government’ s Fraudulent Financial Report. Asia Pacific Fraud Journal, 6(1), 26-42. https://doi.org/10.21532/apfjournal.v6i1.192
Bader, A. A., Abu Hajar, Y. A., Weshah, S. R. S., & Almasri, B. K. (2024). Predicting risk of and motives behind fraud in financial statements of Jordanian industrial firms using hexagon theory. Journal of Risk and Financial Management, 17(3), 120. https://doi.org/10.3390/jrfm17030120
Begum, R., & Siddiqui, D. A. (2024). Does Emotions Matter in Investment Decisions? The Effect of Financial Reporting Fraud on Delegated Investments Decision and Investment Professionals' Performance. The Effect of Financial Reporting Fraud on Delegated Investments Decision and Investment Professionals' Performance (September 18, 2024).
Bint Raza, S., Sheikh, S. M., & Rahman, S. U. (2024). The mediating role of agency cost between corporate governance and financial performance: Evidence from Pakistan Stock Exchange. IRASD Journal of Economics, 6(1), 144-163. https://doi.org/10.52131/joe.2024.0601.0199
Burlacu, G., Robu, I. B., & Munteanu, I. (2024). Exploring the influence of earnings management on the value relevance of financial statements: Evidence from the Bucharest Stock Exchange. International Journal of Financial Studies, 12(3), 72. https://doi.org/10.3390/ijfs12030072
Campa, D., Quagli, A., & Ramassa, P. (2025). The roles and interplay of enforcers and auditors in the context of accounting fraud: a review of the accounting literature. Journal of Accounting Literature, 47(5), 151-183. https://doi.org/10.1108/JAL-07-2023-0134
Chukwuekwu, O. (2024). Fraud and performance of listed deposit money banks in Nigeria: Exploring the combined effects of fraud triangle and fraud diamond theories. Journal of Business and Econometrics Studies, 1(3), 1-8. https://doi.org/10.61440/JBES.2024.v1.27
Demski, J. S. (2003). Corporate conflicts of interest. Journal of Economic Perspectives, 17(2), 51-72. https://doi.org/10.1257/089533003765888421
Fowler, D. S. (2023). Ethical implications of deceptive earnings management practices. Business Ethics and Leadership, 7(3), 84-96. https://doi.org/10.61093/bel.7(3).84-96.2023
Francis, J. R. (2024). What exactly do we mean by audit quality?. Accounting in Europe, 21(2), 123-133. http://dx.doi.org/10.2139/ssrn.4504980
La Rosa, D., Esteban, G., & Shopovski, J. (2013). Directors' conflicts of interest: different European legal perspectives. Beijing L. Rev., 4, 174.
Macey, J. (2005). The Nature of Conflicts of Interest Within the Firm. J. Corp. L., 31, 613.
Manurung, D. T., & Hardika, A. L. (2015). Analysis of factors that influence financial statement fraud in the perspective fraud diamond: Empirical study on banking companies listed on the Indonesia Stock Exchange year 2012 to 2014. International Conference on Accounting Studies. https://doi.org/10.13140/RG.2.1.2058.8563
Mesioye, O., & Bakare, I. A. (2024). Evaluating financial reporting quality: Metrics, challenges, and impact on decision-making. Int J Res Public Rev, 5(10), 1144-1156. https://doi.org/10.55248/gengpi.5.1024.2735
Odetunde, A. Z. E. E. Z., Adekunle, B. I., & Ogeawuchi, J. C. (2021). A systems approach to managing financial compliance and external auditor relationships in growing enterprises. IRE Journals, 4(12), 326-345.
Rajgopal, S., Srinivasan, S., & Zheng, X. (2021). Measuring audit quality: S. Rajgopal et al. Review of Accounting Studies, 26(2), 559-619. https://doi.org/10.1007/s11142-020-09570-9?
Rashid, M. A., Al-Mamun, A., Roudaki, H., & Yasser, Q. R. (2022). An overview of corporate fraud and its prevention approach. Australasian Accounting, Business and Finance Journal, 16(1). https://doi.org/10.14453/aabfj.v16i1.7
Ratmono, D., & Frendy. (2022). Examining the fraud diamond theory through ethical culture variables: a study of regional development banks in Indonesia. Cogent Business & Management, 9(1), 2117161. https://doi.org/10.1080/23311975.2022.2117161
Sabrina, C. N. (2022). Deteksi kecurangan laporan keuangan melalui analisis elemen-elemen fraud hexagon. Jurnal Ilmu dan Riset Akuntansi.
Sunardi, S., & Amin, M. N. (2018). Fraud detection of financial statement by using fraud diamond perspective. International Journal of Development and Sustainability, 7(3), 878-891.
Wahyuni, D., Indriasari, D., & Nur, M. R. (2023). Pengaruh financial stability, external pressure, dan financial target terhadap financial statement fraud (Studi empiris pada perusahaan non-perbankan yang terdaftar dalam indeks SRI-KEHATI periode 2017–2020). E-Proceeding of Management, 10(2), 1087.
Wibowo, D., & Putra, Y. (2023). Factors that Influence Financial Statement Fraud with Fraud Pentagon Analysis. Asia Pacific Fraud Journal, 8(1), 65-76. https://doi.org/10.21532/apfjournal.v8i1.271
Yarana, C. H. A. N. I. D. A. (2023). Factors influencing financial statement fraud: an analysis of the fraud diamond theory from evidence of Thai Listed Companies. WSEAS Transactions on Business and Economics, 20, 1659-1672. https://doi.org/10.37394/23207.2023.20.147
Yousefi Nejad, M., Sarwar Khan, A., & Othman, J. (2024). A panel data analysis of the effect of audit quality on financial statement fraud. Asian Journal of Accounting Research, 9(4), 422-445. https://doi.org/10.1108/AJAR-04-2023-0112
Copyright (c) 2026 Journal La Sociale
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
