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Hexagon Fraud: Detection of Fraudulent Financial Reporting in State-Owned Enterprises Indonesia

Author

Listed:
  • Tarmizi Achmad

    (Department Accounting, Faculty of Economics and Business, Diponegoro University, Semarang 50275, Indonesia)

  • Imam Ghozali

    (Department Accounting, Faculty of Economics and Business, Diponegoro University, Semarang 50275, Indonesia)

  • Imang Dapit Pamungkas

    (Department Accounting, Faculty of Economics and Business, Dian Nuswantoro University, Semarang 50131, Indonesia)

Abstract

This study aims to detect fraudulent financial reporting using hexagon fraud analysis, including seven factors: financial stability, external pressures, ineffective monitoring, auditor changes, change in director, arrogance, and collusion. The subject of this research is a public company consolidated audit report of state-owned enterprises. The existence of conflicting results, the phenomenon of fraudulent financial reporting, and limited research using the hexagon of fraud theory prompted this research to examine the factors that influence fraudulent financial reporting. The sample was selected using a sampling technique, with the criteria of state-owned enterprises listed on the Indonesia Stock Exchange in 2016–2020. The method used is quantitative, and the analytical method used is logistic regression analysis. The sampling technique used was purposeful sampling, so the number of samples was 125. The results of this study indicate that financial stability and external pressures have a positive effect on fraudulent financial reporting. However, ineffective monitoring, auditor changes, change in director, arrogance, and collusion do not affect fraudulent financial reporting.

Suggested Citation

  • Tarmizi Achmad & Imam Ghozali & Imang Dapit Pamungkas, 2022. "Hexagon Fraud: Detection of Fraudulent Financial Reporting in State-Owned Enterprises Indonesia," Economies, MDPI, vol. 10(1), pages 1-16, January.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:1:p:13-:d:716220
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    References listed on IDEAS

    as
    1. Nguyen Ngoc Khanh Dung & Dang Anh Tuan, 2019. "The Study of Audit Expectation Gap: The Auditor?s Responsibilities in a Financial Statement Audit in Vietnam," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(11), pages 1227-1254, November.
    2. Nguyen Ngoc Khanh Dung & Dang Anh Tuan, 2019. "The Study of Audit Expectation Gap: The Auditor’s Responsibilities in a Financial Statement Audit in Vietnam," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(11), pages 1227-1254.
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    Cited by:

    1. Roman Blazek & Pavol Durana & Jakub Michulek, 2023. "Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis," Stats, MDPI, vol. 6(1), pages 1-20, March.
    2. Citra Sukmadilaga & Srihadi Winarningsih & Tri Handayani & Eva Herianti & Erlane K Ghani, 2022. "Fraudulent Financial Reporting in Ministerial and Governmental Institutions in Indonesia: An Analysis Using Hexagon Theory," Economies, MDPI, vol. 10(4), pages 1-14, April.

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