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Financial Fraud in Indonesia: Types and Trends
A recent study conducted by researchers at the School of Accounting, State Polytechnic of Malang, has shed light on the prevalence of financial fraud in Indonesia. The research found that each regime has a unique pattern of financial statement fraud, with senior management being responsible for most cases.
Study Methodology
The study analyzed 93 listed companies that were subject to an official investigation following the publication of fraudulent financial statements. Using content analysis of annual reports, researchers examined the patterns and methods used by companies to falsify their financial statements.
Findings
According to the findings, recording a fictitious sale is the most common method used by companies to commit financial statement fraud. Under the new regime established by the Financial Services Authority (OJK), the publication of cases has been limited since the introduction of risk-based supervision.
The OJK has taken a tougher stance on enforcement, fining and prosecuting individual directors rather than corporations as legal entities. This shift in approach may be contributing to the decline in reported cases of financial statement fraud.
Key Findings
- Senior management is responsible for most cases of financial statement fraud
- Recording a fictitious sale is the most common method used to falsify financial statements
- Under the new regime, individual directors are more likely to be prosecuted rather than corporations
Conclusion
The study highlights the importance of effective regulation and enforcement in preventing and detecting financial statement fraud. The OJK’s shift towards risk-based supervision and increased focus on individual accountability may help to reduce the incidence of financial fraud in Indonesia. Further research is needed to explore the effectiveness of these measures and to identify areas for improvement.
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