Pentagon Fraud and Financial Statement Fraud in State-Owned Enterprises Listed on the Indonesia Stock Exchange During 2021–2025: The Moderating Role of the Audit Committee
DOI:
https://doi.org/10.61194/ijtc.v7i3.2547Keywords:
digital capital, educational development, human capital, pasirmae village, social capitalAbstract
This study seeks to examine the impact of the Fraud Pentagon factors pressure, opportunity, rationalization, competence, and arrogance on financial statement fraud within Indonesian State-Owned Enterprises (SOEs), while also investigating the moderating influence of the audit committee on this relationship. The research used a quantitative methodology, analyzing panel data from 16 state owned enterprises listed on the IDX from 2021 to 2025, yielding 80 balanced panel observations. Panel regression analysis was performed, using the FEM as determined by the Chow and Hausman tests. Financial statement fraud was assessed using the F-Score model, while the audit committee was evaluated as a moderating variable via MRA. The findings indicate that pressure, opportunity, and arrogance positively and significantly influence financial statement fraud, whereas rationalization and competence do not. Regarding the moderating role of the audit committee, the results show that the audit committee significantly weakens the relationship between opportunity and financial statement fraud at the 5 percent significance level. Meanwhile, the moderating effects on the relationships between pressure and financial statement fraud and between arrogance and financial statement fraud are only marginally significant at the 10 percent significance level. No significant moderating effects were found for rationalization and competence. This study contributes to the development of Fraud Pentagon Theory and Agency Theory by emphasizing the importance of monitoring effectiveness in preventing fraudulent financial reporting in SOEs.
References
Abbott, L. J., Parker, S., & Peters, G. F. (2004a). Audit Committee Characteristics and Restatements. Auditing: A Journal of Practice & Theory, 23(1), 69–87.
Abbott, L. J., Parker, S., & Peters, G. F. (2004b). Audit Committee Characteristics and Restatements. Auditing: A Journal of Practice & Theory, 23(1), 69–87.
ACFE. (2024). Occupational Fraud 2024: A Report to the Nations. Association of Certified Fraud Examiners. https://www.acfe.com/report-to-the-nations/2024/.
Andriani, K. F., Budiartha, K., Sari, M. M. R., & Widanaputra, A. A. G. P. (2022). Fraud pentagon elements in detecting fraudulent financial statement. Linguistics and Culture Review, 6(on), 686–710.
Board, A. I. of C. P. Accountants. A. S. (2002). Consideration of Fraud in a Financial Statement Audit:(supersedes Statement on Auditing Standards No. 82, AICPA, Professional Standards, Vol. 1, AU Sec. 316; and Amends SAS No. 1, Codification of Auditing Standards and Procedures, AICPA, Professional Standards, Vol. 1, AU Sec. 230," Due Professional Care in the Performance of Work," and SAS No. 85, Management Representations, AICPA, Professional Standard, Vol. 1, AU Sec 333). American Institute of Certified Public Accountants.
BPK. (2023). Ikhtisar Hasil Pemeriksaan Semester (IHPS) II Tahun 2023.
Crowe, H. (2011). Why the fraud triangle is no longer enough. Horwath, Crowe LLP.
Dechow, P. M., Ge, W., Larson, C. R., & Sloan, R. G. (2011). Predicting material accounting misstatements. Contemporary Accounting Research, 28(1), 17–82.
Devi, P. V. S. (2024). Corporate governance as a detector of financial statement fraud: Systematic literature review. Asia Pacific Fraud Journal, 9(1), 37–47.
Fabiolla, R. G., Andriyanto, W. A., & Julianto, W. (2021). Pengaruh fraud pentagon terhadap fraudulent financial reporting. Konferensi Riset Nasional Ekonomi Manajemen Dan Akuntansi, 2(1), 981–995.
Gita, I. G. A. T., Anggriani, R., Alpiansah, R., Hendri, W., & Dethan, S. H. (2025). External pressure, ineffective monitoring and change in auditor on financial fraud in mining subsector companies. Implementasi Manajemen & Kewirausahaan, 5(1), 31–46.
Hasnan, S., Rahman, R. A., & Mahenthiran, S. (2020). Fraudulent financial reporting and corporate governance mechanisms. Asian Review of Accounting, 28(3), 321–342.
Ibrahim, L., & Darwis, H. (2024). Optimization of Green Value through the Application of the Determinant Pentagon Model in Prevention of Fraud in Financial Reports. Pakistan Journal of Life & Social Sciences, 22(2).
Ibrahim, L., Darwis, H., & Supriatiningsih, S. (2022). Mekanisme Good Corporate Governance Dalam Menekan Tindakan Kecurangan Pada Perusahaan Go Green Di Indonesia. Jurnal Akuntansi, 11(2), 248–263.
Indiraswari, S. D., Subroto, B., Rosidi, R., & Subekti, I. (2025). Corporate governance and financial statement fraud: Evidence on the moderating influence of financial distress. Problems and Perspectives in Management, 23(2), 785.
Irianto, D., Rikalmi, R. T., & Munthe, D. V. U. (2025). ANALYSIS OF FINANCIAL STATEMENT FRAUD USING THE FRAUD HEXAGON APPROACH IN STATE-OWNED ENTERPRISES LISTED ON THE INDONESIA STOCK EXCHANGE. Journal of Applied Managerial Accounting, 9(2), 132–142.
Irman, M., & Suriyanti, L. H. (2025). THE INFLUENCE OF FRAUD PENTAGON ON FRAUDULENT FINANCIAL STATEMENTS. Bilancia: Jurnal Ilmiah Akuntansi, 9(2), 213–228.
Jensen, M.C., and Meckling, W. H. (1976). “Theory of the Firm: Managerial behavior, Agency Cost and Ownership Structure.” Journal of Financial Economics, 3, 305–360.
Kassem, R. (2022). How could external auditors assess the rationalization of fraud? Journal of Financial Crime, 29(4), 1458–1467.
Kharimah, K. N., Nugraha, N., Budiyono, I., & Arumsari, V. (2024). The Role of Fraud Pentagon Elements in Financial Statement Fraud: Evidence from Islamic Commercial Banks in Indonesia. Economica: Jurnal Ekonomi Islam, 15(2), 159–185.
KPK. (2024). Laporan Tahunan KPK 2023. In Jakarta: Komisi Pemberantasan Korupsi Republik Indonesia. https://www.kpk.go.id/id/publikasi-data/laporan/laporan-tahunan.
Li, X. (2025). Financial Fraud, Audit Failure, and Regulatory Oversight Breakdown: An Empirical Analysis of the Wirecard Scanda. Journal of Innovation and Developmen, 13, 301–308.
Megginson, W. L., & Netter, J. M. (2001). From state to market: A survey of empirical studies on privatization. Journal of Economic Literature, 39(2), 321–389.
Muchlis., S. M. T. L. U. M. (2025). Mengatasi Fraud dengan SCCOREIG Model (Strategi Efektif Untuk Perusahaan Tambang di ASEAN. CV. Bravo Press Indonesia.
Nindito, M., Avianti, I., Koeswayo, P. S., & Tanzil, N. D. (2025). Guardians of integrity: Exploring the role of corporate governance in preventing financial statement fraud. Journal of Governance and Regulation, 14(1), 109–118.
OECD. (2024). NoOECD Guidelines on Corporate Governance of State-Owned Enterprises 2024. https://doi.org/10.1787/18a24f43-en.
Omar, N., Johari, Z. A., & Hasnan, S. (2015). Corporate culture and the occurrence of financial statement fraud: A review of literature. Procedia Economics and Finance, 31, 367–372.
Ozcelik, H. (2020a). An analysis of fraud factors in fraudulent financial reporting. Journal of Applied Accounting Research, 21(2), 283–299.
Ozcelik, H. (2020b). An analysis of fraud factors in fraudulent financial reporting. Journal of Applied Accounting Research, 21(2), 283–299.
Pandaya; Supriatiningsih. (2025). HU MODEL OPTIMIZATION TO DETECT FRAUD IN FINANCIAL REPORTS THAT AFFECT GREEN VALUE WITH LITIGATION RISK IN ASEAN. Veredas Do Direito Direito Ambiental e Desenvolvimento Sustentável, 22(2).
Riany, M., Primadiva, P. P., Hatmoko, M. Z. D., Fadhilah, N. H. K., & Mujahidi, K. (2024). The Effect Of The Fraud Pentagon On Fraudulent Financial Statements And Their Impact On Investment Decisions. EKOMBIS REVIEW: Jurnal Ilmiah Ekonomi Dan Bisnis, 12(3), 3033–3046.
Rifa, D., & Tasrif, S. M. (2022). The effect of financial stability, financial targets and rationalization on financial statements fraud. Journal of Contemporary Accounting, 169–178.
Said, J., Alam, M. M., & Ramli, M. (2021). Financial pressure and fraudulent financial reporting. Journal of Financial Crime, 28(4), 1185–1201.
Sari, P. (2024). Does The Fraud Pentagon Theory Effectively Detect Financial Statement Fraud? AFRE (Accounting and Financial Review), 7(2), 195–204.
Septiani, I. (2025). Pengaruh External Pressure, Financial Target, And Financial Stability Pada Kecurangan Laporan Keuangan. Jurnal Akuntansi Keuangan Dan Perpajakan| E-ISSN: 3063-8208, 2(1), 38–44.
Sinaga, J., & Siagian, V. (2025). The effect of financial stability, ineffective monitoring and auditor opinion on financial statement fraud (Empirical Study on Multinational Companies Listed on the IDX). 12th International Scholars Conference 2025, 12(5), 1099–1121.
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.
Stevansyah, N., & Suhendah, R. (2023). The effect of fraud triangle on financial statement fraud in banking companies. International Journal of Application on Economics and Business, 1(4), 1988–1999.
Submitter, G., Said, A., Amiruddin, A., & Pontoh, G. T. (2021). Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable. Journals and Said, Andalia and Amiruddin, Amiruddin and Pontoh, Grace T., Analysis of Factors Affecting Fraudulent Financial Reporting with Independent Commissioners as Moderation Variable (March 31, 2021). Reference to This Paper Should Be Made as Follows: Andalia, 1–12.
Supriatiningsih., Darwis, H. P., & Saleh, R. (2024). SCORE MODEL AND RISK LITIGATION: INVESTIGATING THE IMPACT OF FRAUD IN REPORT CORPORATE FINANCE. In IJME JOURNAL, 3.
Supriatiningsih, S., & Darwis, H. (2023). Peran Corporate Governance Terhadap Tax Avoidance pada Perusahaan di Indonesia. Widyakala Journal: Journal of Pembangunan Jaya University, 10(1).
Supriatiningsih, S., Suryaningsih, M., Husadha, C., & Kalbuana, N. (2023). A moderation variable’s impact of the triangle theory of fraudulent financial reporting with managerial ownership. Review of Economics and Finance, 21(1), 2375–2383.
Taneja, S., Bhatnagar, M., Kumar, P., & Rupeika-Apoga, R. (2023). India’s total natural resource rents (NRR) and GDP: An augmented autoregressive distributed lag (ARDL) bound test. Journal of Risk and Financial Management, 16(2), 91.
Taufiqurahman., S. (2025). Strategies to Enhance Company Value: the Impact Oo Firm Size, Sales, Growth, and Ceo Gender in the Contemporary Business Word. International Journal of Integrative Sciences, 4(3).
Teichmann, F. M. J., Boticiu, S. R., & Sergi, B. S. (2024). Wirecard scandal. A commentary on the biggest accounting fraud in Germany’s post-war history. Journal of Financial Crime, 31(5), 1166–1173.
Tjen, F., Sitorus, T., & Chasanah, R. N. (2020). Financial Stability, Leverage, Ineffective Monitoring, Independent Audit Committee, and the Fraudulent Financial Statement. International Research Journal of Business Studies, 13(2), 161–172.
Velte, P. (2022). Corporate social responsibility performance, reporting and generalized methods of moments (GMM): A structured review of corporate governance determinants and firms’ financial consequences. Corporate Ownership and Control, 19(2), 8–27.
Velte, P. (2023). The link between corporate governance and corporate financial misconduct. A review of archival studies and implications for future research. Management Review Quarterly, 73(1), 353–411.
Vousinas, G. L. (2019). Advancing theory of fraud: the SCORE model. Journal of Financial Crime, 26(1), 372–381.
Wolfe, D. T., & Hermanson, D. R. (2004). The fraud diamond: Considering the four elements of fraud.
Yovita, M., & Suryani, E. (2024). Determinasi faktor-faktor arrogance sebagai perspektif fraud pentagon terhadap kecurangan laporan keuangan. Jurnal Riset Akuntansi Politala, 7(1), 166–176.
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Hidayat Darwis, Supriatiningsih, Samukri
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
