Factors Affecting Financial Statement Fraud : Fraud Triangle Approach

3rd Economics & Business Research Festival. Proceeding Seminar &Call For Papers : Business Dynamics Toward Competitive Economic Region Of Asean (Salatiga : 2014), p. 1939 - 1955This study aims to obtain empirical evidence about relationship of fraud triangle with financial statement fraud. Fraud triangle theory explains that pressure, opportunity, and rationalization are always present in fraud situations. The variables of fraudrisk factor for pressure are using proxy financial stability; sales growth (SGROW), asset growth (AGROW), and cash flow to earnings growth (NICFOTA), financial security that proxy by account receivable turnover (SALAR) and asset turnover (SALTA), external pressure that proxy by leverage (LEV), financial targets proxy by return on asset (ROA). Variables for opportunity used are ineffective monitoring proxy by independent board members (BOUTP), board members on audit committee over board size (AUDCSIZE), and independent audit committee (IND). Variables for rationalization are using managements’ control proxy which represent by auditor opinion (AUDREPORT). Financial statement fraud is representing by a proxy of earning management. Earnings management as measured by discretionary accruals estimated using the modified Jones model (1991). The population of this research is 133 manufacturing companies listed on Indonesia Stock Exchange (IDX) in 2011 and 2012. Data analysis was performed through classical assumption and hypothesis testing using linear regression. The result of this research indicates that all variables which represent opportunity, pressure, and rationalizations have significant association with financial statement fraud. Association of asset growth, sales growth, return on asset, board members on audit committee over board size, and independent audit committee are supported previous research. Moreover other factor asset turnover, receivable turnover, operating cash flow indicator, leverage, independent board, and auditor opinion contradicts previous study supported by constructive reason of practic