Fraud factors of financial statements on construction industry in Indonesia stock exchange

  • Yudha Pramana Udayana University, Denpasar, Indonesia
  • Herkulanus Bambang Suprasto Udayana University, Denpasar, Indonesia
  • I Gusti Ayu Made Dwija Putri Udayana University, Denpasar, Indonesia
  • I Gusti Ayu Nyoman Budiasih Udayana University, Denpasar, Indonesia
Keywords: audit, evidence, financial, fraud, triangle


This research was intended at analyzing the fraud factors of the financial statement using the fraud triangle theory approach. Financial statements manipulation was a fraud form. It was generally difficult to detect. The population was all companies engaged in the construction industry sector. They were listed on the Indonesia Stock Exchange in 2013-2017. The multiple regression is applied for the determination of the sample using purposive sampling techniques and data analysis techniques. The statistical test results showed the opportunity proxied by the audit committee illustrates the effectiveness of the control. It has been negatively affecting the fraudulent financial statements. The rationalization proxied by the auditor’s change has a positive effect on the fraudulent financial statements. This study also contributed to the fraud triangle theory. It was provided evidence that elements in the fraud triangle model. They can be used to detect fraudulent financial statements.


Download data is not yet available.


Abbott, L. J., Park, Y., & Parker, S. (2000). The effects of audit committee activity and independence on corporate fraud. Managerial Finance, 26(11), 55-68.

Baker, G. P., Jensen, M. C., & Murphy, K. J. (1988). Compensation and incentives: Practice vs. theory. The journal of Finance, 43(3), 593-616.

Balsam, S., Krishnan, J., & Yang, J. S. (2003). Auditor industry specialization and earnings quality. Auditing: A journal of practice & Theory, 22(2), 71-97.

Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Lapides, P. D. (2000). Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizons, 14(4), 441-454.

Bire, A. R., Sauw, H. M., & Maria, -. (2019). The effect of financial literacy towards financial inclusion through financial training. International Journal of Social Sciences and Humanities, 3(1), 186-192.

Cendrowski, H., Martin, J. P., & Petro, L. W. (2007). Handbook of fraud deterrence. John Wiley & Sons.

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

Cressey, D. R. (1986). Why managers commit fraud. Australian & New Zealand Journal of Criminology, 19(4), 195-209.

Dewi, I. G. A. A. O., & Dewi, I. G. A. A. P. (2017). Corporate social responsibility, green banking, and going concern on banking company in Indonesia stock exchange. International Journal of Social Sciences and Humanities, 1(3), 118-134.

Fahlina Permana, J. (2018). Pengaruh fraud diamond terhadap kecurangan laporan keuangan pada sektor pertambangan yang terdaftar di bursa efek indonesia tahun 2012-2016 (Doctoral dissertation, STIE PERBANAS SURABAYA).

Ghafran, C., & O'Sullivan, N. (2017). The impact of audit committee expertise on audit quality: Evidence from UK audit fees. The British Accounting Review, 49(6), 578-593.

Golden, T. W. (2011). A guide to forensic accounting investigation. John Wiley & Sons.

Hadi, A., Handajani, L., & Putra, I. N. N. A. (2018). Financial Disclosure based on Web-ICT Determinants: Its Implications for Local Government Financial Performance in Indonesia. International Research Journal of Management, IT and Social Sciences, 5(1), 72-85.

Hoopes, J. L., Merkley, K. J., Pacelli, J., & Schroeder, J. H. (2018). Audit personnel salaries and audit quality. Review of Accounting Studies, 23(3), 1096-1136.

Hubens, R. J. P. R. (2012). The Influence of the Financial Crisis on Auditor Changes and Earnings Management. Tilburg University, Available at: http://arno. uvt. nl/show. cgi.

Lisa, O., & Hermanto, B. (2018). The effect of tax amnesty and taxpayer awareness to taxpayer compliance with financial condition as intervening variable. International Research Journal of Management, IT and Social Sciences, 5(2), 227-236.

Martin, J. A., Hamilton, B. E., Ventura, S. J., Osterman, M. J., & Mathews, T. J. (2013). Births: final data for 2011.

Molida, R., & Chariri, A. (2011). Pengaruh financial stability, personal financial need dan ineffective monitoring pada financial statement fraud dalam perspektif fraud triangle (Doctoral dissertation, Universitas Diponegoro).

Nugraheni, A. U., & Septiarini, D. F. (2017). Pengaruh Equivalent Rate, Profitabilitas, dan Jumlah Kantor Terhadap Dana Pihak Ketiga BPRS di Indonesia (Periode Tahun 2013-2015). Jurnal ekonomi syariah teori dan terapan, 4(11), 875.

Pramanaswari, A. S. I., & Yasa, G. W. (2018). Graham & Dodd theory in stock portfolio performance in LQ 45 index at Indonesia stock exchange. International Research Journal of Management, IT and Social Sciences, 5(6), 52-59.

Putriasih, K., Herawati, N. T., AK, S., & Wahyuni, M. A. (2016). Analisis Fraud Diamond Dalam Mendeteksi Financial Statement Fraud: Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia (bei) Tahun 2013-2015. JIMAT (Jurnal Ilmiah Mahasiswa Akuntansi) Undiksha, 6(3).

Rini, V. Y., & Achmad, T. (2012). ANALISIS PREDIKSI POTENSI RISIKO FRAUDULENT FINANCIAL STATEMENT MELALUI FRAUD SCORE MODEL (Studi Empiris pada Perusahaan Manufaktur y ang Terdaftar di Bursa Efek Indonesia Tahun 2008-2010) (Doctoral dissertation, Fakultas Ekonomika dan Bisnis).

Skousen, C. J., Smith, K. R., & Wright, C. J. (2009). Detecting and predicting financial statement fraud: The effectiveness of the fraud triangle and SAS No. 99. In Corporate governance and firm performance (pp. 53-81). Emerald Group Publishing Limited.

Soltani, B. (2014). The anatomy of corporate fraud: A comparative analysis of high profile American and European corporate scandals. Journal of business ethics, 120(2), 251-274.

Summers, S. L., & Sweeney, J. T. (1998). Fraudulently misstated financial statements and insider trading: An empirical analysis. Accounting Review, 131-146.

Sumtaky, M., Chandrarin, G., & Sanusi, A. (2018). Effect of elements of regional financial management towards SKPD regency/city performance and its implication on public service. International Research Journal of Engineering, IT & Scientific Research, 4(2), 73-86.

Tuanakotta, T. M. (2013). Mendeteksi Manipulasi Laporan Keuangan. Jakarta: Salemba Empat.

Uzun, H., Szewczyk, S. H., & Varma, R. (2004). Board composition and corporate fraud. Financial Analysts Journal, 60(3), 33-43.

Verschoor, C. C. (2008). Audit committee essentials. Wiley.

Wahyuni, W., & Budiwitjaksono, G. S. (2017). Fraud triangle sebagai pendeteksi kecurangan laporan keuangan. Jurnal Akuntansi, 21(1), 47-61.

Wells, J. T. (2018). International Fraud Handbook. John Wiley & Sons.

Zhou, F., Zhang, Z., Yang, J., Su, Y., & An, Y. (2018). Delisting pressure, executive compensation, and corporate fraud: Evidence from China. Pacific-Basin Finance Journal, 48, 17-34.

How to Cite
Pramana, Y., Suprasto, H. B., Putri, I. G. A. M. D., & Budiasih, I. G. A. N. (2019). Fraud factors of financial statements on construction industry in Indonesia stock exchange. International Journal of Social Sciences and Humanities, 3(2), 187-196.
Research Articles