Analysis of Financial Statement Fraud Detection Using the Fraud Triangle Theory

Empirical Study on Construction Companies Listed on the Indonesia Stock Exchange for the Period 2019–2023

Abstrak

Financial statement fraud has become increasingly prevalent compared to other types of fraud, such as corruption and asset misappropriation, posing significant risks to the credibility of financial reporting and stakeholder decision-making. The urgency of this study arises from the increasing complexity of financial transactions and the vulnerability of the construction sector to manipulation due to its project-based nature, large contract values, and high estimation uncertainty. These conditions create opportunities for fraudulent financial reporting that may not be easily detected, thereby necessitating empirical examination of key risk factors. Therefore, this study aims to examine the effect of financial stability, nature of industry, and change in auditor on fraudulent financial reporting in construction companies listed on the Indonesia Stock Exchange during the period 2019–2023. The data used in this study were obtained from the annual financial statements of construction companies listed on the Indonesia Stock Exchange from 2019 to 2023. The sample consists of 85 observations from 17 companies over a five-year period. The sampling technique employed was non-probability sampling using a purposive sampling method. To analyze the effect of the variables, classical assumption tests and panel data regression analysis using the common effect model were applied. The results show that financial stability, nature of industry, and change in auditor collectively explain fraudulent financial reporting. However, the partial test results indicate that only the nature of industry has a significant effect in detecting fraudulent financial reporting, while financial stability and change in auditor do not have a significant effect on the detection of fraudulent financial reporting.