Detecting Financial Reporting Fraud Using the Fraud Hexagon Model with Beneish M Score Measurement: Evidence from the Islamic Banking Sector
This study examines the prediction of fraudulent financial reporting by using fraud hexagon theory with six elements (pressure, opportunity, rationalization, capability, arrogance and collusion). The sample of this research is an Islamic banking company unit of Islamic people’s financing bank (BPRS) registered with the Financial Services Authority (OJK) with the data taken is unaudited data for 2019–2021. The number of samples processed was 210 and with panel data testing software E views 12. By measuring financial reporting using the Beneish M Score and detecting fraud with the Fraud Hexagon, the test results show that three of the six elements, namely rationalization, capability and collusion, significantly affect fraudulent financial reporting. The effect is positive, confirming the propositions of the fraud hexagon theory. Meanwhile, pressure, opportunity and arrogance cannot indicate the occurrence of fraudulent financial statements.
Keywords: Fraud Hexagon, Beneish M Score, Fraud Financial Reporting