Influence Factor Model for Fraud Detection in Construction Companies’ Financial Statements

Numerous instances of financial statement manipulation by Indonesian construction companies have surfaced in recent years. This indicates fraud practices in the construction industry as well as the inadequacy of external auditors in carrying out financial audits. Therefore, this study looks at the factors that influence external auditors in detecting fraud in construction financial statement audits. These factors were found through a literature review and subsequently incorporated into the questionnaire. This study used factor analysis to create an influence factor model, which was subsequently validated in a focus group discussion. By concentrating on the construction business environment, this study advances the theoretical understanding of financial audit. Practically, this study offers a model for policymakers on key factors that may influence the ability of external auditors in detecting fraud so that strategic steps can be taken to improve their abilities.