The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting

Theresia Trisanti

doi:doi:10.11648/j.ijafrm.20230804.14

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The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting

Theresia Trisanti

Published in International Journal of Accounting, Finance and Risk Management (Volume 8, Issue 4)

Received: 17 October 2023 Accepted: 21 November 2023 Published: 29 November 2023

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Abstract

This research explores the impact of audit committee characteristics on potential fraudulent financial reporting, focusing on independence, financial expertise, and tenure. The study utilizes the Beneish M-score index to identify fraudulent financial reporting in manufacturing firms listed on the Indonesia Stock Exchange (IDX) between 2018 and 2021, employing purposive sampling for sample selection. The analysis employs Partial Least Squares (PLS) statistical tools. The results of the study reveal that both independence and tenure of the audit committee significantly influence the occurrence of financial reporting fraud. However, financial expertise within the audit committee does not exhibit a significant impact on fraudulent financial reporting. These findings underscore the importance of an independent audit committee and its tenure in safeguarding against fraudulent financial reporting. Investors are advised to carefully examine the presence of an independent audit committee when assessing potential investments. The research suggests that a robust audit committee, characterized by independence and a longer tenure, plays a pivotal role in mitigating the risks associated with financial reporting fraud. Furthermore, the study recommends a periodic reassessment of corporate governance practices as a prudent step before making investment decisions in a company. This research contributes valuable insights to the ongoing discourse on corporate governance and financial reporting integrity in the context of manufacturing firms on the IDX.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 8, Issue 4)
DOI	10.11648/j.ijafrm.20230804.14
Page(s)	113-122
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Fraudulent Financial Reporting, Independent Audit Committee, Financial Expertise, Tenure of the Audit Committee

References

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APA Style

Trisanti, T. (2023). The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting. International Journal of Accounting, Finance and Risk Management, 8(4), 113-122. https://doi.org/10.11648/j.ijafrm.20230804.14

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ACS Style

Trisanti, T. The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting. Int. J. Account. Finance Risk Manag. 2023, 8(4), 113-122. doi: 10.11648/j.ijafrm.20230804.14

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AMA Style

Trisanti T. The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting. Int J Account Finance Risk Manag. 2023;8(4):113-122. doi: 10.11648/j.ijafrm.20230804.14

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@article{10.11648/j.ijafrm.20230804.14,
  author = {Theresia Trisanti},
  title = {The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {8},
  number = {4},
  pages = {113-122},
  doi = {10.11648/j.ijafrm.20230804.14},
  url = {https://doi.org/10.11648/j.ijafrm.20230804.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20230804.14},
  abstract = {This research explores the impact of audit committee characteristics on potential fraudulent financial reporting, focusing on independence, financial expertise, and tenure. The study utilizes the Beneish M-score index to identify fraudulent financial reporting in manufacturing firms listed on the Indonesia Stock Exchange (IDX) between 2018 and 2021, employing purposive sampling for sample selection. The analysis employs Partial Least Squares (PLS) statistical tools. The results of the study reveal that both independence and tenure of the audit committee significantly influence the occurrence of financial reporting fraud. However, financial expertise within the audit committee does not exhibit a significant impact on fraudulent financial reporting. These findings underscore the importance of an independent audit committee and its tenure in safeguarding against fraudulent financial reporting. Investors are advised to carefully examine the presence of an independent audit committee when assessing potential investments. The research suggests that a robust audit committee, characterized by independence and a longer tenure, plays a pivotal role in mitigating the risks associated with financial reporting fraud. Furthermore, the study recommends a periodic reassessment of corporate governance practices as a prudent step before making investment decisions in a company. This research contributes valuable insights to the ongoing discourse on corporate governance and financial reporting integrity in the context of manufacturing firms on the IDX.
},
 year = {2023}
}

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TY  - JOUR
T1  - The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting
AU  - Theresia Trisanti
Y1  - 2023/11/29
PY  - 2023
N1  - https://doi.org/10.11648/j.ijafrm.20230804.14
DO  - 10.11648/j.ijafrm.20230804.14
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 113
EP  - 122
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20230804.14
AB  - This research explores the impact of audit committee characteristics on potential fraudulent financial reporting, focusing on independence, financial expertise, and tenure. The study utilizes the Beneish M-score index to identify fraudulent financial reporting in manufacturing firms listed on the Indonesia Stock Exchange (IDX) between 2018 and 2021, employing purposive sampling for sample selection. The analysis employs Partial Least Squares (PLS) statistical tools. The results of the study reveal that both independence and tenure of the audit committee significantly influence the occurrence of financial reporting fraud. However, financial expertise within the audit committee does not exhibit a significant impact on fraudulent financial reporting. These findings underscore the importance of an independent audit committee and its tenure in safeguarding against fraudulent financial reporting. Investors are advised to carefully examine the presence of an independent audit committee when assessing potential investments. The research suggests that a robust audit committee, characterized by independence and a longer tenure, plays a pivotal role in mitigating the risks associated with financial reporting fraud. Furthermore, the study recommends a periodic reassessment of corporate governance practices as a prudent step before making investment decisions in a company. This research contributes valuable insights to the ongoing discourse on corporate governance and financial reporting integrity in the context of manufacturing firms on the IDX.

VL  - 8
IS  - 4
ER  -

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Author Information

Theresia Trisanti

Department Accounting, Stie Ykpn, Sekolah Tinggi Ilmu Ekonomi YKPN, Yogyakarta, Indonesia

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APA Style

Trisanti, T. (2023). The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting. International Journal of Accounting, Finance and Risk Management, 8(4), 113-122. https://doi.org/10.11648/j.ijafrm.20230804.14

Copy | Download

ACS Style

Trisanti, T. The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting. Int. J. Account. Finance Risk Manag. 2023, 8(4), 113-122. doi: 10.11648/j.ijafrm.20230804.14

Copy | Download

AMA Style

Trisanti T. The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting. Int J Account Finance Risk Manag. 2023;8(4):113-122. doi: 10.11648/j.ijafrm.20230804.14

Copy | Download

@article{10.11648/j.ijafrm.20230804.14,
  author = {Theresia Trisanti},
  title = {The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {8},
  number = {4},
  pages = {113-122},
  doi = {10.11648/j.ijafrm.20230804.14},
  url = {https://doi.org/10.11648/j.ijafrm.20230804.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20230804.14},
  abstract = {This research explores the impact of audit committee characteristics on potential fraudulent financial reporting, focusing on independence, financial expertise, and tenure. The study utilizes the Beneish M-score index to identify fraudulent financial reporting in manufacturing firms listed on the Indonesia Stock Exchange (IDX) between 2018 and 2021, employing purposive sampling for sample selection. The analysis employs Partial Least Squares (PLS) statistical tools. The results of the study reveal that both independence and tenure of the audit committee significantly influence the occurrence of financial reporting fraud. However, financial expertise within the audit committee does not exhibit a significant impact on fraudulent financial reporting. These findings underscore the importance of an independent audit committee and its tenure in safeguarding against fraudulent financial reporting. Investors are advised to carefully examine the presence of an independent audit committee when assessing potential investments. The research suggests that a robust audit committee, characterized by independence and a longer tenure, plays a pivotal role in mitigating the risks associated with financial reporting fraud. Furthermore, the study recommends a periodic reassessment of corporate governance practices as a prudent step before making investment decisions in a company. This research contributes valuable insights to the ongoing discourse on corporate governance and financial reporting integrity in the context of manufacturing firms on the IDX.
},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - The Influence of the Audit Committee Characteristics on Fraudulent Financial Reporting
AU  - Theresia Trisanti
Y1  - 2023/11/29
PY  - 2023
N1  - https://doi.org/10.11648/j.ijafrm.20230804.14
DO  - 10.11648/j.ijafrm.20230804.14
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 113
EP  - 122
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20230804.14
AB  - This research explores the impact of audit committee characteristics on potential fraudulent financial reporting, focusing on independence, financial expertise, and tenure. The study utilizes the Beneish M-score index to identify fraudulent financial reporting in manufacturing firms listed on the Indonesia Stock Exchange (IDX) between 2018 and 2021, employing purposive sampling for sample selection. The analysis employs Partial Least Squares (PLS) statistical tools. The results of the study reveal that both independence and tenure of the audit committee significantly influence the occurrence of financial reporting fraud. However, financial expertise within the audit committee does not exhibit a significant impact on fraudulent financial reporting. These findings underscore the importance of an independent audit committee and its tenure in safeguarding against fraudulent financial reporting. Investors are advised to carefully examine the presence of an independent audit committee when assessing potential investments. The research suggests that a robust audit committee, characterized by independence and a longer tenure, plays a pivotal role in mitigating the risks associated with financial reporting fraud. Furthermore, the study recommends a periodic reassessment of corporate governance practices as a prudent step before making investment decisions in a company. This research contributes valuable insights to the ongoing discourse on corporate governance and financial reporting integrity in the context of manufacturing firms on the IDX.

VL  - 8
IS  - 4
ER  -

Copy | Download