ANALYSIS OF HEXAGON FRAUD MODEL, THE S.C.C.O.R.E MODEL INFLUENCING FRAUDULENT FINANCIAL REPORTING ON STATE-OWNED COMPANIES OF INDONESIA

Lely  Indriaty; Gen  Norman Thomas

doi:10.2478/eoik-2023-0060

Authors

Lely Indriaty
Gen Norman Thomas

DOI:

https://doi.org/10.2478/eoik-2023-0060

Keywords:

Arrogance, Capability, Collusion, Hexagon, Opportunity, Pressure, Rationalization

Abstract

This research aims to analyze the influence of each Hexagon Fraud factor that causes fraudulent financial reporting, namely Pressure, Opportunity, Rationalization, Arrogance, Capability and Collusion based on respondents’ perceptions of the content. The research meth-odology used is a quantitative method, sample determination was car-ried out using a purposive sampling method with certain criteria. The questionnaire was distributed to 3 leaders and 3 officials based on the selected sample. Primary data was obtained to test 6 research hypoth-eses based on the answers of 96 respondents from 16 State-Owned Enterprises (SOEs) from the selected sample. Data processing uses Smart PLS version 3.00 to test validity and reliability and test research hypotheses. The results of research on hexagon fraud theory show that Opportunity, Arrogance and Capability have a positive and significant effect on Fraudulent Financial Reporting, while Pressure, Rational-ization and Collusion do not have a significant effect on Fraudulent Financial Reporting. Research findings reveal that fraud perpetrators are parties who have a deep understanding of the company’s internal control policies, especially knowledge about the effectiveness or in- effectiveness of internal controls, both from within and from outside SOEs. Fraud perpetrators may come from leaders or officials who are knowledgeable about the organizational structure and governance of officials in strategic positions.

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