The Role of Fraud Diamond in Detecting Fraudulent Financial Statements

The implementation of financial statement components in Indonesia has become increasingly comprehensive. However, there are still ample opportunities for management and other parties to commit fraud in financial statements, particularly in the banking sector. The research aims to analyze whether fraud diamond influences the occurrence of fraud in the banking industry. The sample used in this study consists of banking reports from 2018 to 2021, with a total of 120 banks included. The research findings indicate that the pressure variable and rationalization variable have a positive impact on financial statement fraud. On the other hand, the opportunity variable and capability variable do not influence financial statement fraud. The positive results suggest that when management is unable to meet predetermined targets, their motivation to engage in fraudulent activities increases. Additionally, reporting accrual income in the income statement, regardless of whether the cash has been received from customers during that period or not, serves as a motivation for management to present their financial statements more appealingly to investors. Keywords: fraud diamond, fraudulent financial statements, banking sector

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Publication Details

Journal
KnE Social Sciences
Published
2024-08-15
DOI
https://doi.org/10.18502/kss.v9i24.16838
Primary Topic
Imbalanced Data Classification Techniques
Type
article
Field-Weighted Citation Impact
0.00
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article

The Role of Fraud Diamond in Detecting Fraudulent Financial Statements

Kania Nurcholisah, Lasmanah Lasmanah, Nurleli Nurleli, Pupung Purnamasari
KnE Social Sciences
Imbalanced Data Classification Techniques
article

The Role of Fraud Diamond in Detecting Fraudulent Financial Statements

Kania Nurcholisah, Lasmanah Lasmanah, Nurleli Nurleli, Pupung Purnamasari
article en

Abstract

The implementation of financial statement components in Indonesia has become increasingly comprehensive. However, there are still ample opportunities for management and other parties to commit fraud in financial statements, particularly in the banking sector. The research aims to analyze whether fraud diamond influences the occurrence of fraud in the banking industry. The sample used in this study consists of banking reports from 2018 to 2021, with a total of 120 banks included. The research findings indicate that the pressure variable and rationalization variable have a positive impact on financial statement fraud. On the other hand, the opportunity variable and capability variable do not influence financial statement fraud. The positive results suggest that when management is unable to meet predetermined targets, their motivation to engage in fraudulent activities increases. Additionally, reporting accrual income in the income statement, regardless of whether the cash has been received from customers during that period or not, serves as a motivation for management to present their financial statements more appealingly to investors. Keywords: fraud diamond, fraudulent financial statements, banking sector

KnE Social Sciences
Bandung Islamic University (ID)
Peace, Justice and strong institutions
Openalex Percentile: Top 89%
Imbalanced Data Classification Techniques
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