The Beneish M-Score Model in Detecting Fraudulent Financial Reporting: The Hexagon Perspective Theory

Authors

  • Sherawanti Permata Kusuma Department of Accounting, Faculty of Economics and Business, Universitas Dian Nuswantoro
  • Melati Oktafiyani Department of Accounting, Faculty of Economics and Business, Universitas Dian Nuswantoro https://orcid.org/0000-0002-6645-0448
  • Imang Dapit Pamungkas Department of Accounting, Faculty of Economics and Business, Universitas Dian Nuswantoro
  • Juli Ratnawati Department of Accounting, Faculty of Economics and Business, Universitas Dian Nuswantoro

DOI:

https://doi.org/10.33633/jpeb.v9i1.8369

Abstract

This research aims to investigate the effect of fraud on fraudulent financial reports (FFR) using the hexagon theory. The seven factors were financial stability, external pressure, ineffective monitoring, auditor changes, director changes, arrogance, and collusion. This study has a population of health companies listed on the IDX in 2018-2021. This study uses a quantitative approach. Based on the logistic regression analysis, the study finds that financial stability, change director, and arrogance affect FFR. On the other hand, external pressure, ineffective monitoring, auditor change, and collusion do not affect FFR. Keywords:Fraudulent financial reporting, Hexagon theory, Beneish M-Score

Author Biography

Melati Oktafiyani, Department of Accounting, Faculty of Economics and Business, Universitas Dian Nuswantoro

Google Scholar

References

Achmad, T., Ghozali, I., & Pamungkas, I. D. (2022). Hexagon Fraud: Detection of Fraudulent Financial Reporting in State-Owned Enterprises Indonesia. Economies, 10(1). https://doi.org/10.3390/economies10010013

Achmad, T., Ghozali, I., Rahardian, M., Helmina, A., Hapsari, D. I., & Pamungkas, I. D. (2022). Detecting Fraudulent Financial Reporting Using the Fraud Hexagon Model: Evidence from the Banking Sector in Indonesia. https://doi.org/10.3390/economies

Achmad, T., Hapsari, D. I., & Pamungkas, I. D. (2022). Analysis of Fraud Pentagon Theory to Detecting Fraudulent Financial Reporting using F-Score Model in State-Owned Companies Indonesia. WSEAS Transactions on Business and Economics, 19, 124–133. https://doi.org/10.37394/23207.2022.19.13

Adnovaldi, Y., & Wibowo, W. (2019). ANALISIS DETERMINAN FRAUD DIAMOND TERHADAP DETEKSI FRAUDULENT FINANCIAL STATEMENT. JURNAL INFORMASI, PERPAJAKAN, AKUNTANSI, DAN KEUANGAN PUBLIK, 14(2), 125–146. https://doi.org/10.25105/jipak.v14i2.5195

Andalia, A., Amiruddin, A., & Pontoh, G. T. (2021). Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable. GATR Accounting and Finance Review, 5(4), 01–12. https://doi.org/10.35609/afr.2021.5.4(1)

Apriliana, S., & Agustina, L. (2017). The Analysis of Fraudulent Financial Reporting Determinant through Fraud Pentagon Approach. JDA Jurnal Dinamika Akuntansi, 9(2), 154–165. https://doi.org/10.15294/jda.v9i2.4036

Arum, E. D. P., & Wahyudi, I. (2020). Fraudulent Financial Reporting Detection in Banking Sector: Evidence from Indonesia. International Journal of Psychosocial Rehabilitation, Conference Special Issue.

Aviantara, R. (2021). The Association Between Fraud Hexagon and Government’s Fraudulent Financial Report. Asia Pacific Fraud Journal, 6(1), 26. https://doi.org/10.21532/apfjournal.v6i1.192

Beneish, M. D. (1999). The Detection of Earnings Manipulation. Financial Analysts Journal, 55(5), 24–36. https://doi.org/10.2469/faj.v55.n5.2296

Cressey, D. R. (1953). Other people’s money; a study of the social psychology of embezzlement. In Other people’s money; a study of the social psychology of embezzlement. Free Press.

Dalnial, H., Kamaluddin, A., Sanusi, Z. M., & Khairuddin, K. S. (2014). Detecting Fraudulent Financial Reporting through Financial Statement Analysis. Journal of Advanced Management Science, 2(1), 17–22. https://doi.org/10.12720/joams.2.1.17-22

detikNews. (2021, April 29). Manajer Kimia Farma Raup Untung Rp 30 Juta dari Hasil Tes Antigen Bekas. https://news.detik.com/berita/d-5551640/manajer-kimia-farma-raup-untung-rp-30-juta-dari-hasil-tes-antigen-bekas

Diansari, R. E., & Wijaya, A. T. (2019). Diamond fraud analysis in detecting financial statement fraud. Journal of Business and Information Systems (e-ISSN: 2685-2543), 1(2), 63–76. https://doi.org/10.36067/jbis.v1i2.23

Fathmaningrum, E. S., & Anggarani, G. (2021). Fraud Pentagon and Fraudulent Financial Reporting: Evidence from Manufacturing Companies in Indonesia and Malaysia. Journal of Accounting and Investment, 22(3), 625–646. https://doi.org/10.18196/jai.v22i3.12538

Haqq, A. P. N. A., & Budiwitjaksono, G. S. (2020). Fraud Pentagon for Detecting Financial Statement Fraud. Journal of Economics, Business, & Accountancy Ventura, 22(3). https://doi.org/10.14414/jebav.v22i3.1788

Harman, S. A., & Bernawati, Y. (2020). Determinant of Financial Statement Fraud: Fraud Pentagon Perspective in Manufacturing Companies. 19(4), 628–638. https://doi.org/10.17051/ilkonline.2020.04.166

Hidayah, E., & Saptarini, G. D. (2019). Pentagon Fraud Analysis in Detecting Potential Financial Statement Fraud of Banking Companies in Indonesia.

Hidayat, E., & Utami, W. (2023). Determinants of Financial Statement Fraud: Political Connections as Moderation. International Journal for Multidisciplinary Research (IJFMR). www.ijfmr.com•

Howarth, C. (2012). The Mind Behind The Fraudsters Crime: Key Behavioral and Environmental Elements. : https://www.fraudconference.com/uploadedFiles/Fraud_Conference/Content/Course-Materials/ presentations/23rd/ppt/10C-Jonathan-Marks.pdf

Indarto, S. L., & Ghozali, I. (2016). Fraud diamond: Detection analysis on the fraudulent financial reporting. Risk Governance and Control: Financial Markets and Institutions, 6(4Continued1), 116–123. https://doi.org/10.22495/rcgv6i4c1art1

Julia, J., & Yunita, A. (2022). The Effect of Hexagon Fraud in Detecting Fraud Financial Statements (Empirical Study on Financial Sector Companies Listed on the Indonesia Stock Exchange 2017-2021). International Journal of Multidisciplinary: Applied Business and Education Research, 3(10), 2112–2124. https://doi.org/10.11594/ijmaber.03.10.23

Larum, K., Zuhroh, D., & Subiyantoro, E. (2021). Fraudlent Financial Reporting: Menguji Potensi Kecurangan Pelaporan Keuangan dengan Menggunakan Teori Fraud Hexagon. AFRE (Accounting and Financial Review), 4(1), 95–106. https://doi.org/10.26905/afr.v4i1.5957

Lestari, M. I., & Henny, D. (2019). PENGARUH FRAUD PENTAGON TERHADAP FRAUDULENT FINANCIAL STATEMENTS PADA PERUSAHAAN PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2015-2017. Jurnal Akuntansi Trisakti, 6(1), 141–156. https://doi.org/10.25105/jat.v6i1.5274

Maryadi, A. D., Midiastuty, P. P., Suranta, E., & Robiansyah, A. (2020). Pengaruh fraud pentagon dalam mendeteksi fraudulent financial reporting. Jurnal Akuntansi, Keuangan, Dan Manajemen, 2(1), 13–25. https://doi.org/10.35912/jakman.v2i1.104

Nanda, S. T., Salmiah, N., & Mulyana, D. (2019). Fraudulent Financial Reporting: A Pentagon Fraud Analysis. Jurnal Ilmiah Ekonomi Dan Bisnis.

Nanda, S. T., Zenita, R., & Salmiah, N. (2019). Fraudulent Financial Reporting: A Fraud Pentagon Analysis. GATR Accounting and Finance Review, 4(4), 106–113. https://doi.org/10.35609/afr.2019.4.4(2)

Noble, M. R. (2019). Fraud diamond analysis in detecting financial statement fraud. The Indonesian Accounting Review, 9(2), 121. https://doi.org/10.14414/tiar.v9i2.1632

Nur Fajri, S. (2018). THE EFFECT OF FINANCIAL STABILITY, EXTERNAL PRESSURE, PERSONAL FINANCIAL NEED, FINANCIAL TARGETS, INEFFECTIVE MONITORING AND AUDIT QUALITY ON DETECTING FRAUD FINANCIAL STATEMENT IN PERSPECTIVE OF FRAUD TRIANGLE. Journal of Business Economics, 23(2), 191–199. https://doi.org/10.35760/eb.2018.v23i2.1828

Pambudi, B. C., Ekonomi, F., Bisnis, D., Lampung, U., Sudrajat, S., & Amelia, Y. (2022). PENGARUH KARAKTERISTIK FRAUD PENTAGON DALAM MENDETEKSI KECURANGAN LAPORAN KEUANGAN PADA PERUSAHAAN SEKTOR KEUANGAN YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2016-2020. In Jurnal Akuntansi Bisnis dan Ekonomi (Vol. 1, Issue 08).

Pramana, Y., Suprasto, H. B., Putri, I. G. A. M. D., & Budiasih, I. G. A. N. (2019). Fraud Factors of fFinancial Statements on Construction Industry in Indonesia Stock Exchange. International Journal of Social Sciences and Humanities, 3(2), 187–196. https://doi.org/10.29332/ijssh.v3n2.313

Pratami, S. R., Widowati, Y. S., & Prapti, L. (2019). Influence Of Fraud Pentagon Toward Fraudulent Financial Reporting In Indonesia An Empirical Study On Financial Sector Listed In Indonesian Stock Exchange. INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH, 8, 8. www.ijstr.org

Purnama, S. I., & Astika, I. B. P. (2022). Financial Stability, Personal Financial Need, Financial Target, External Pressure dan Financial Statement Fraud. E-Jurnal Akuntansi, 32(1), 3522. https://doi.org/10.24843/eja.2022.v32.i01.p15

Rimadanti, S., Santoso, A., & Sulistyawati, A. I. (2022). The Role of Pentagon Fraud in Detecting Fraudulent Financial Statements. Golden Ratio of Finance Management, 2(2), 87–97. https://doi.org/10.52970/grfm.v2i2.185

Rizkiawan, M., Subagio Politeknik Keuangan Negara STAN Jl Bintaro Utama Sektor, S. V, Selatan, T., & rizkiawan, I. (2022). Fraud Hexagon and corporate governance analysis on the potential fraud in financial statements. Integritas: Jurnal Antikorupsi, 8(2), 269–282. https://doi.org/10.32697/integritas.v8i2.909

Rusmana, O., & Tanjung, H. (2019). Identifikasi Kecurangan Laporan Keuangan Dengan Fraud Pentagon Studi Empiris BUMN Terdaftar Di Bursa Efek Indonesia.

Sari, M. P., Pramasheilla, N., Fachrurrozie, Suryarini, T., & Paimuigkas, I. D. (2020). Analysis of fraudulent financial reporting with the role of KAP big four as a moderation variable: Crowe’s fraud’s pentagon theory. International Journal of Financial Research, 11(5), 180–190. https://doi.org/10.5430/IJFR.V11N5P180

Sari, S. P., & Khoiriah, N. (2021). Hexagon Fraud Detection of Regional Government Financial Statement as A Fraud Prevention on The Pandemic Crisis Era. 24(2).

Sari, S. P., & Nugroho, N. K. (2020). Financial Statements Fraud dengan Pendekatan Vousinas Fraud Hexagon Model: Tinjauan pada Perusahaan Terbuka di Indonesia 26.

Skousen, C. J., Smith, K. R., Wright, C. J., & Chasteen Chair, L. G. (2008). Detecting And Predicting Financial Statement Fraud: The Effectiveness Of The Fraud Traingle And SAS No. 99. http://ssrn.com/abstract=1295494Electroniccopyavailableat:https://ssrn.com/abstract=1295494Electroniccopyavailableat:http://ssrn.com/abstract=1295494Electroniccopyavailableat:https://ssrn.com/abstract=1295494

Sukmadilaga, C., Winarningsih, S., Handayani, T., Herianti, E., & Ghani, E. K. (2022). Fraudulent Financial Reporting in Ministerial and Governmental Institutions in Indonesia: An Analysis Using Hexagon Theory. Economies, 10(4). https://doi.org/10.3390/economies10040086

SURVEI FRAUD INDONESIA. (2020).

Suryandari, E., & Pratama, L. V. (2021). Determinan Fraud Dana Desa: Pengujian Elemen Fraud Hexagon, Machiavellian, dan Love of Money. Reviu Akuntansi Dan Bisnis Indonesia, 5(1), 55–78. https://doi.org/10.18196/rabin.v5i1.11688

Suryani, I. C. (2019). ANALISIS FRAUD DIAMOND DALAM MENDETEKSI FINANCIAL STATEMENT FRAUD: STUDI EMPIRIS PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA (BEI) TAHUN 2016-2018. In Seminar Nasional Cendekiawan ke (Vol. 5).

Syahria, R. (2019). DETECTING FINANCIAL STATEMENT FRAUD USING FRAUD DIAMOND (A Study on Banking Companies Listed On the Indonesia Stock Exchange Period 2012-2016). Asia Pacific Fraud Journal, 4(2). https://doi.org/10.21532/apfjournal.v4i2.114

Umar, H., Purba, R., Partahi, D., & Purba, R. B. (2020). Fraud Diamond Analysis In Detecting Fraudulent Financial Report. Article in International Journal of Scientific & Technology Research. www.ijstr.org

Utami, B. S., & Aliyansah, P. I. (2020). COVID-19: Challenges and opportunities in Indonesia health sector. E3S Web of Conferences, 202. https://doi.org/10.1051/e3sconf/202020201008

Utami, E. R., Muhammadiyah, U., Jalan, Y., Selatan, L., Tirto, T., Kasihan, B., & Pusparini, N. O. (2019). The Analysis of Fraud Pentagon Theory and Financial Distress for Detecting Fraudulent Financial Reporting in Banking Sector in Indonesia (Empirical Study of Listed Banking Companies on Indonesia Stock Exchange in 2012-2017).

Vousinas, G. L. (2019). Advancing theory of fraud: the S.C.O.R.E. model. Journal of Financial Crime, 26(1), 372–381. https://doi.org/10.1108/JFC-12-2017-0128

Wolfe, D. T., & Hermanson, D. R. (2004). The Fraud Diamond: Considering the Four Elements of Fraud. https://digitalcommons.kennesaw.edu/facpubs

Downloads

Published

2024-04-05

How to Cite

Kusuma, S. P., Oktafiyani, M., Pamungkas, I. D., & Ratnawati, J. (2024). The Beneish M-Score Model in Detecting Fraudulent Financial Reporting: The Hexagon Perspective Theory. Jurnal Penelitian Ekonomi Dan Bisnis, 9(1), 15–28. https://doi.org/10.33633/jpeb.v9i1.8369

Issue

Vol. 9 No. 1 (2024): Jurnal Penelitian Ekonomi dan Bisnis

Section

Articles

License

Authors who publish with this journal agree to the following terms:
  1. The journal allow the authors to hold the copyright without restrictions and allow the authors to retain publishing rights without restrictions. 
  2. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  3. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  4. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
  5. Creative Commons License
    This work is licensed under a Creative Commons Attribution 4.0 International License.  Which means you are free to:
    • Adapt — remix, transform, and build upon the material for any purpose, even commercially.