The effect of diamond fraud on the detection of fraudulent financial statements with the audit committee as a moderating variable

Abstract

This study aims to determine the effect of fraud diamond by using six varieties of proxies, namely financial stability, external pressure, financial targets, ineffective monitoring, auditor turnover and directors change to the detection of financial statement fraud by using discretionary accrual profit management by adding audit committee as moderation variable . This research uses samples of 8 pharmaceutical sub-companies listed in Indonesia Stock Exchange (IDX) period 2012-2016. The type of data used is secondary data, in the form of annual reports of companies listing on the IDX during the period 2010-2012. Hypothesis testing is done by multiple linear regression method with SPSS 17 software. The result of this research shows that the fraud diamond by using six proxy variables namely financial stability, external pressure, financial target, ineffective monitoring, change of auditor and change of directors have influence to financial statement fraud . This study proves that audit committee variables are able to moderate the effect of fraud diamond on the detection of financial statement fraud. Suggestions for subsequent research to use other sector companies for research, using a method of determining samples other than purvosive sampling, replacing other independent variables that might influence the financial fraud detection action, it is recommended to use other moderating variables.