Fraud Diamond Model for Fraudulent Financial Statement Detection
Bambang Leo Handoko1, Natasya2
1Bambang Leo Handoko, Accounting Department, Faculty of Economics and Communication, Bina Nusantara University, Jakarta, Indonesia, 11480.
2Natasya, Accounting Department, Faculty of Economics and Communication, Bina Nusantara University, Jakarta, Indonesia, 11480.
Manuscript received on 07 August 2019. | Revised Manuscript received on 15 August 2019. | Manuscript published on 30 September 2019. | PP: 6765-6872 | Volume-8 Issue-3 September 2019 | Retrieval Number: C5838098319/2019©BEIESP | DOI: 10.35940/ijrte.C5838.098319
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Many cases of fraud that occur and are revealed. something happened in the realm of employee fraud and fraud management. One of the frauds that causes substantial losses is fraudulent financial reporting. Fraudulent financial statement becomes one of the fraud schemes that growth simultaneously within the current years. Many of this fraud scheme cause large sum amount of loss to investor, creditors and other financial statement user. The purpose of this research is to gain empirical evidence about financial statements fraud detection using fraud diamond elements. This research is conducted on listed banking companies in Indonesia Stock Exchange year 2014-2018. There is a total of 190 samples companies used in this research which further analyzed by using Logistic Regression Analysis. Statistical test is conducted to test the hypothesis. The test included: determination of coefficient, logistic regression and partial hypothesis testing. Fraudulent financial statement is proxies by Beneish M-score. The research concluded that Pressure proxies by Changes in Total Assets affects significantly to fraudulent financial statements detection. Meanwhile, Pressure proxies by Return on Assets, Opportunity proxies by Ratio of Independent Board of Commissioners, Rationalization proxies by Changes of External Auditor and Capability proxies by Changes in Board of Director do not affect significantly towards fraudulent financial statements detection. Determination of coefficient test result indicates that 20% of fraudulent financial reporting was able to be explained by pressure, opportunity, rationalization and capabilities.
Keywords: Fraud, Diamond, Beneish m-Score, Fraudulent, Financial, Reporting, Banking, Stock, Exchange
Scope of the Article: Industrial, Financial and Scientific Applications of All Kind