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All Journal JABE (Journal of Accounting and Business Education)
Hussein Hassan Laizer
Moshi Cooperative University
Economics, Econometrics & Finance Education

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The Role of the Audit Committee in Moderating Financial Statement Fraud: A Pentagon Fraud Theory Perspective Duta Ajipamulasuari; Indira Januarti; Hussein Hassan Laizer
JABE (JOURNAL OF ACCOUNTING AND BUSINESS EDUCATION) Volume 11, Issue 1, September 2026
Publisher : Universitas Negeri Malang

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.17977/jabe.v11i1.63318

Abstract

This research examines the causes of potential financial statement fraud in the Indonesian banking sector, utilizing the Fraud Pentagon model (Pressure, Opportunity, Rationalization, Competence, Arrogance), with the audit committee serving as a moderating variable. The novelty of this research lies in the use of the Loan Loss Provision (LLP) as a proxy for arrogance and the role of the audit committee in reducing the potential for fraud. The research population is banking companies listed on the Indonesian stock exchange from 2019 to 2024. Based on the specified criteria, 252 observation data were obtained. The analysis tool uses logistic regression, which is processed with the help of EViews 13. The research results show pressure (financial targets), opportunities (ineffective monitoring), rationalization (change of auditors), competence (director changes) and arrogance in (Loan Loss Provisions) have no potential influence on the possibility of fraudulent financial statements. Opportunities (ineffective monitoring) on the possibility of fraudulent financial statements. However, the audit committee did not participate in reducing the potential influence of pressure (financial targets), rationalization (change of auditor), competence (change of director), and arrogance (loan loss provisions) on the possibility of financial statement fraud. The results of this research can provide implications for strengthening the supervisory role carried out by the audit committee in strengthening efforts to detect and prevent possible fraud in the banking sector.
Co-Authors Duta Ajipamulasuari Indira Djanuarti