IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v10y2022i4p86-d787772.html

Fraudulent Financial Reporting in Ministerial and Governmental Institutions in Indonesia: An Analysis Using Hexagon Theory

Author

Listed:
  • Citra Sukmadilaga

    (Accounting Department, Faculty of Economics and Business, Universitas Padjadjaran, Bandung 45363, Indonesia)

  • Srihadi Winarningsih

    (Accounting Department, Faculty of Economics and Business, Universitas Padjadjaran, Bandung 45363, Indonesia)

  • Tri Handayani

    (Faculty of Law, Universitas Padjadjaran, Bandung 45363, Indonesia)

  • Eva Herianti

    (Doctoral Program in Accounting, Faculty of Economics and Business, Universitas Padjadjaran, Bandung 45363, Indonesia)

  • Erlane K Ghani

    (Faculty of Accountancy, Universiti Teknologi MARA Cawangan Selangor, Puncak Alam 42300, Malaysia)

Abstract

This study examined fraudulent financial reporting in the ministerial and governmental institutions in Indonesia. It adopted the hexagon theory that identified six elements (pressure, opportunity, rationalisation, capability, arrogance, and collusion) in determining whether these elements influence fraudulent financial reporting in the institutions. Content analysis was used on the financial statements of thirty-two ministerial and governmental institutions over three years from 2018 to 2020. This study shows that three out of the six elements, namely opportunity, arrogance, and collusion, significantly affect fraudulent financial reporting. The effects are positive, confirming the proposition of the hexagon theory. On the other hand, this study could not provide evidence on the effect of pressure, rationalisation, and capability on fraudulent financial reporting in the ministerial and governmental institutions. The findings in this study suggest the importance of a holistic application of the whistle-blowing and e-procurement systems in all governmental elements to deliver a transparent, accountable organisational performance for the stakeholders, especially society.

Suggested Citation

  • Citra Sukmadilaga & Srihadi Winarningsih & Tri Handayani & Eva Herianti & Erlane K Ghani, 2022. "Fraudulent Financial Reporting in Ministerial and Governmental Institutions in Indonesia: An Analysis Using Hexagon Theory," Economies, MDPI, vol. 10(4), pages 1-14, April.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:4:p:86-:d:787772
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/10/4/86/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/10/4/86/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tarmizi Achmad & Imam Ghozali & Imang Dapit Pamungkas, 2022. "Hexagon Fraud: Detection of Fraudulent Financial Reporting in State-Owned Enterprises Indonesia," Economies, MDPI, vol. 10(1), pages 1-16, January.
    2. Anca Nichita & Larissa Batrancea & Ciprian Marcel Pop & Ioan Batrancea & Ioan Dan Morar & Ema Masca & Ana Maria Roux-Cesar & Denis Forte & Henrique Formigoni & Adilson Aderito da Silva, 2019. "We Learn Not for School but for Life: Empirical Evidence of the Impact of Tax Literacy on Tax Compliance," Eastern European Economics, Taylor & Francis Journals, vol. 57(5), pages 397-429, September.
    3. Rabi’u Abdullahi & Noorhayati Mansor, 2015. "Fraud Triangle Theory and Fraud Diamond Theory. Understanding the Convergent and Divergent For Future Research," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 38-45, October.
    4. Tuan Zainun Tuan Mat & Danny Shahmizi Teh Ismawi & Erlane K Ghani, 2019. "Do Perceived Pressure and Perceived Opportunity Influence Employees¡¯ Intention to Commit Fraud?," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 132-143, May.
    5. Shaio Yan Huang & Chi-Chen Lin & An-An Chiu & David C. Yen, 0. "Fraud detection using fraud triangle risk factors," Information Systems Frontiers, Springer, vol. 0, pages 1-14.
    6. Shaio Yan Huang & Chi-Chen Lin & An-An Chiu & David C. Yen, 2017. "Fraud detection using fraud triangle risk factors," Information Systems Frontiers, Springer, vol. 19(6), pages 1343-1356, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Syerli Novita & Tri Widyastuti & Darmansyah, 2025. "The Determinants of Fraudulent Financial Reporting: (A Systematic Literature Review)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(3), pages 1042-1055, March.
    2. repec:bcp:journl:v:8:y:2024:i:9:p:2255-2268 is not listed on IDEAS
    3. Victor Ochieng Omata & Benson Gathoni & George Musumba, 2024. "The Role of Fraud Opportunities in Procurement Irregularities at Public National Referral Hospitals in Nairobi County, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(12), pages 3708-3718, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bin Xia & Yuxuan Bai & Junjie Yin & Yun Li & Jian Xu, 0. "LogGAN: a Log-level Generative Adversarial Network for Anomaly Detection using Permutation Event Modeling," Information Systems Frontiers, Springer, vol. 0, pages 1-14.
    2. Bin Xia & Yuxuan Bai & Junjie Yin & Yun Li & Jian Xu, 2021. "LogGAN: a Log-level Generative Adversarial Network for Anomaly Detection using Permutation Event Modeling," Information Systems Frontiers, Springer, vol. 23(2), pages 285-298, April.
    3. Chen Wang & Jack Strauss & Lei Zheng, 2021. "High-Speed Railway Opening and Corporate Fraud," Sustainability, MDPI, vol. 13(23), pages 1-23, December.
    4. Syerli Novita & Tri Widyastuti & Darmansyah, 2025. "The Determinants of Fraudulent Financial Reporting: (A Systematic Literature Review)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(3), pages 1042-1055, March.
    5. Maria Rosa Intansari & Supramono Supramono, 2022. "The Effect of Tax Literacy on Tax Compliance: The Moderating Role of Patriotism," Technium Social Sciences Journal, Technium Science, vol. 34(1), pages 455-464, August.
    6. Ioan Batrancea & Larissa Batrancea & Malar Maran Rathnaswamy & Horia Tulai & Gheorghe Fatacean & Mircea-Iosif Rus, 2020. "Greening the Financial System in USA, Canada and Brazil: A Panel Data Analysis," Mathematics, MDPI, vol. 8(12), pages 1-13, December.
    7. Larissa Batrancea & Malar Mozhi Rathnaswamy & Ioan Batrancea, 2021. "A Panel Data Analysis of Economic Growth Determinants in 34 African Countries," JRFM, MDPI, vol. 14(6), pages 1-15, June.
    8. Christian Hauser, 2019. "Fighting Against Corruption: Does Anti-corruption Training Make Any Difference?," Journal of Business Ethics, Springer, vol. 159(1), pages 281-299, September.
    9. Ashraf Mishrif & Asharul Khan, 2023. "Causal Analysis of Company Performance and Technology Mediation in Small and Medium Enterprises During COVID-19," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4730-4753, December.
    10. Xiaoqian Zhu & Huidong Wu & Yanpeng Chang & Jianping Li, 2025. "Accounting fraud detection through textual risk disclosures in annual reports: From the perspective of SEC guidelines," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(2), pages 1837-1862, June.
    11. Abbas, Ahmad, 2017. "Earnings Fraud and Financial Stability," OSF Preprints f5jpx, Center for Open Science.
    12. Valetin Marian Antohi & Costinela Fortea & Monica Laura Zlati & Romeo-Victor Ionescu & Cristian Mirica, 2022. "Efficiency of financial indicators of the Romanian state budget, an objective of economic security during the epidemiological crisis," Journal of Financial Studies, Institute of Financial Studies, vol. 12(7), pages 38-51, May.
    13. Bello Umar & Umar Abbas Ibrahim & Peter Eriki, 2020. "Forensic Accounting and Incidence of Fraud Detection: Evidence from Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 72-81, April.
    14. Larissa Batrancea, 2021. "The Influence of Liquidity and Solvency on Performance within the Healthcare Industry: Evidence from Publicly Listed Companies," Mathematics, MDPI, vol. 9(18), pages 1-15, September.
    15. Olukayode Abayomi Sorunke, 2016. "Personal Ethics and Fraudster Motivation: The Missing Link in Fraud Triangle and Fraud Diamond Theories," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(2), pages 159-165, February.
    16. Larissa Batrancea, 2021. "The Nexus between Financial Performance and Equilibrium: Empirical Evidence on Publicly Traded Companies from the Global Financial Crisis Up to the COVID-19 Pandemic," JRFM, MDPI, vol. 14(5), pages 1-12, May.
    17. Petr Hajek & Mohammad Zoynul Abedin & Uthayasankar Sivarajah, 2023. "Fraud Detection in Mobile Payment Systems using an XGBoost-based Framework," Information Systems Frontiers, Springer, vol. 25(5), pages 1985-2003, October.
    18. Eddy Odhiambo Ageke & Dr. Bonface Matayo Ratemo & Dr. George Musumba, 2025. "The Effect of Perceived Pressure on Occupational Fraud among Insurance Companies in Kenya," International Journal of Leadership and Governance, IPRJB, vol. 5(4), pages 1-15.
    19. Khalil Feghali & Reine Najem & Beverly Dawn Metcalfe, 2022. "Financial Auditing During Crisis: Assessing and Reporting Fraud and Going Concern Risk in Lebanon," Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(4), pages 575-603, December.
    20. Larissa M. Batrancea, 2021. "An Econometric Approach on Performance, Assets, and Liabilities in a Sample of Banks from Europe, Israel, United States of America, and Canada," Mathematics, MDPI, vol. 9(24), pages 1-22, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:10:y:2022:i:4:p:86-:d:787772. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager The email address of this maintainer does not seem to be valid anymore. Please ask MDPI Indexing Manager to update the entry or send us the correct address (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.