The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma

This study aims to analyze the effect of Fraud Pentagon, Audit Quality, and Financial Performance on the risk of financial statement fraud at PT Indofarma Tbk during the period 2020-2023. The method used is a quantitative approach with a linear regression model, as well as fraud detection through t...

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Main Authors: Carsinah Azhara, Sirri Mubarokah, Cahya Dewi Kirani, Janiman Janiman
Format: Article
Language:English
Published: Universitas KH Abdul Chalim, Prodi Ekonomi Syariah 2025-08-01
Series:Indonesian Interdisciplinary Journal of Sharia Economics
Subjects:
Online Access:https://www.e-journal.uac.ac.id/index.php/iijse/article/view/7206
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author Carsinah Azhara
Sirri Mubarokah
Cahya Dewi Kirani
Janiman Janiman
author_facet Carsinah Azhara
Sirri Mubarokah
Cahya Dewi Kirani
Janiman Janiman
author_sort Carsinah Azhara
collection DOAJ
description This study aims to analyze the effect of Fraud Pentagon, Audit Quality, and Financial Performance on the risk of financial statement fraud at PT Indofarma Tbk during the period 2020-2023. The method used is a quantitative approach with a linear regression model, as well as fraud detection through the Beneish M-Score and evaluation of risk factors using the Fraud Pentagon Model. The results showed that the Beneish M-Score value was consistently above the -2.22 threshold, indicating the potential for earnings manipulation throughout the observation period, with the highest peak in 2022. In addition, the Fraud Pentagon Score increased significantly in 2023, mainly influenced by the pressure (1.00000) and competence (0.94069) factors, which are the main indicators of increased fraud risk. Although the regression test results show that the effect of the three variables is not statistically significant (p-value > 0.05), the Fraud Pentagon has the highest practical contribution (R² = 0.302) in explaining the variation of report manipulation. This finding confirms the importance of monitoring financial pressure and perpetrator competence in the early detection of fraud. This study recommends strengthening corporate governance, increasing auditor independence, and managing financial pressure as more effective fraud prevention strategies.
format Article
id doaj-art-23b1707cbb2e46f1ba4a6f0e8279e983
institution Kabale University
issn 2621-606X
language English
publishDate 2025-08-01
publisher Universitas KH Abdul Chalim, Prodi Ekonomi Syariah
record_format Article
series Indonesian Interdisciplinary Journal of Sharia Economics
spelling doaj-art-23b1707cbb2e46f1ba4a6f0e8279e9832025-08-20T16:51:37ZengUniversitas KH Abdul Chalim, Prodi Ekonomi SyariahIndonesian Interdisciplinary Journal of Sharia Economics2621-606X2025-08-0183The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT IndofarmaCarsinah Azhara0Sirri Mubarokah1Cahya Dewi Kirani2Janiman Janiman3University Swadaya Gunung Jati, Cirebon, IndonesiaUniversitas Swadaya Gunung Jati Cirebon, IndonesiaUniversitas Swadaya Gunung Jati Cirebon, IndonesiaUniversitas Swadaya Gunung Jati Cirebon, Indonesia This study aims to analyze the effect of Fraud Pentagon, Audit Quality, and Financial Performance on the risk of financial statement fraud at PT Indofarma Tbk during the period 2020-2023. The method used is a quantitative approach with a linear regression model, as well as fraud detection through the Beneish M-Score and evaluation of risk factors using the Fraud Pentagon Model. The results showed that the Beneish M-Score value was consistently above the -2.22 threshold, indicating the potential for earnings manipulation throughout the observation period, with the highest peak in 2022. In addition, the Fraud Pentagon Score increased significantly in 2023, mainly influenced by the pressure (1.00000) and competence (0.94069) factors, which are the main indicators of increased fraud risk. Although the regression test results show that the effect of the three variables is not statistically significant (p-value > 0.05), the Fraud Pentagon has the highest practical contribution (R² = 0.302) in explaining the variation of report manipulation. This finding confirms the importance of monitoring financial pressure and perpetrator competence in the early detection of fraud. This study recommends strengthening corporate governance, increasing auditor independence, and managing financial pressure as more effective fraud prevention strategies. https://www.e-journal.uac.ac.id/index.php/iijse/article/view/7206Fraud Pentagon, Audit Quality, Financial Performance, Beneish M-Score, Financial Statement Manipulation
spellingShingle Carsinah Azhara
Sirri Mubarokah
Cahya Dewi Kirani
Janiman Janiman
The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma
Indonesian Interdisciplinary Journal of Sharia Economics
Fraud Pentagon, Audit Quality, Financial Performance, Beneish M-Score, Financial Statement Manipulation
title The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma
title_full The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma
title_fullStr The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma
title_full_unstemmed The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma
title_short The Relationship Between Fraud Pentagon, Audit Quality, and Financial Performance with the Risk of Financial Statement Fraud: An Empirical Study on PT Indofarma
title_sort relationship between fraud pentagon audit quality and financial performance with the risk of financial statement fraud an empirical study on pt indofarma
topic Fraud Pentagon, Audit Quality, Financial Performance, Beneish M-Score, Financial Statement Manipulation
url https://www.e-journal.uac.ac.id/index.php/iijse/article/view/7206
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