MEASURING THE LEVEL OF FRAUD ON FINANCIAL STATEMENTS: MODEL OF FRAUD TRIANGLE (Case Studies on Companies Listed on the Indonesia Stock Exchange in 2014-2018) Ramdany

This study aims to measure the level of fraudulent financial statements with the fraud triangle model. The independent variables are pressure, opportunity, rationalization, and the dependent variable is fraudulent financial statements. The population in this study is companies listed on the Indonesia Stock Exchange (IDX) in 2014-2018 with a sample of 100 companies. Data analysis techniques using multiple linear regression. The results show that the pressure with proxies the financial stability and financial target and the opportunity with proxy the nature of industry has significant effect on the financial statement fraud. Meanwhile, the opportunity with proxies the ineffective monitoring and rationalization have not significant effect on the financial statement fraudulent.


INTRODUCTION
Fraud is one of type crime (Holtfreter, 2005;Karyono, 2013). Fraud is an act to gain profit through misuse of assets, manipulation of financial statements and corruption (Wells, 2017). Fraud is white collar crime that uses intelligence (Albrecht et al., 2012). Fraud by manipulating financial reports have a lower intensity than fraud of asset misuse and corruption, but they have significant loss impact (ACFE, 2018).
Financial statement manipulation is a deliberate act by manipulating the company's economic transactions (Johnstone et al., 2014). Engineered economic transactions are included in the elements of the financial statements. Financial statements performance of company higher than the real with financial window dressing. Financial statement a good appearance which requires taking certain actions that enhance financial results. Financial window dressing is illegal action. Stakeholders and the company will suffer material losses from their actions.
According to  there are three elements that cause of fraud are pressure, opportunity and the rationalization. The concept is known as the fraud triangle theory. Fraud that is caused by due to pressure on needs or economic pressure or lifestyle so that increasing unbalance income and expenditure. Fraud that is caused by opportunity generally occurs with the abuse of power or deliberate abuse of power and fraudulent act. Fraud is caused by rationalization due to deviations between rationality of thinking and negative actions are considered legal.
The American Institute Certified Public Accountant (AICPA, 2002) published Statement of Auditing Standard No.99 (SAS No.99) which is based on the fraud triangle theory as a solution in the procedure for detecting financial statement fraud. Based on SAS No.99, there are four pressure conditions that encourage fraud, namely financial stability, financial targets, personal financial need and external pressure. Then SAS No.99 explains that fraud caused by an opportunity occurs because of ineffective monitoring, nature of industry and organizational structure. Studied conducted by Skousen et al. (2009), Husmawati et al. (2017), Bawekes et al (2018), Syahria et al (2019), Handoko and Natasya (2019) show that pressure has an effected on fraudulent financial statements and form of a threat financial stability. While research conducted by Yulianti et al (2019), Rengganis et al (2019) and Wailan'An et al (2019) pressure with a proxy financial stability has no effect on fraudulent financial statements.
The results of studied by Akbar (2017), Surjaatmaja (2018), Setiawati and Baningrum (2018), Sunardi and Amin (2018) show that pressure has an effected on fraudulent financial statements due to financial targets. In contrast of the study by Skousen et al (2009), Indarto and Ghozali (2016) and Aviantara (2019) which show that pressure has no effect on fraudulent financial statements on proxy financial targets. Studied by Putriasih et al (2016), Rukmana (2018) and Yendrawati et al (2019) show that the opportunity on proxies of nature of industry has an effect on fraudulent financial statements. In contrast studied by Annisya et al (2016), Akbar (2017) and Putra (2019) which show that the opportunity on proxy nature of industry has no effect on fraudulent financial statements.
Studied conducted by Rukmana (2018), Syahputra and Erlina (2019) show that opportunity on ineffective monitoring proxy has affects on financial statement fraud. In the contrast studied by Yesiariani and Rahayu (2017), Wahyuni at al (2017), Setiawati and Baningrum (2018) which show that opportunities on ineffective monitoring proxy have no effect on fraudulent financial statements. Furthermore, studied by Husmawati et al (2017), Wahyuni at al (2017), Premananda et al (2019) and Syahria et al (2019) show that rationalization has an effect on fraudulent financial statements. Meanwhile studied by Lou and Wang (2009), Santoso and Surenggono (2018), Septriyani and Handayani (2018) shows that rationalization has no effect on fraudulent financial statements.
Based on the explanation and inconsistencies in the results of previous studied, this study explorer about measuring the level of fraud on financial statements with the model fraud triangle theory. Data from companies listed on the Indonesia Stock Exchange (BEI) in year 2014 -2018. The result of studied will enhance of accounting knowledge to increase the quality of corporate financial statements.

LITERATURE REVIEW AGENCY THEORY
Agency theories describe the relationship between shareholders (principle) and management (agent) (Jensen and Meckling, 1976). Agency theory focuses on determining efficient contracts as the basis for the relationship between principal and agent. The optimal work contract must be able to balance between the principal and the agent. An efficient contract has two important factors: • Principals and agents must have symmetrical or the equal information to avoid unfair information and unbalance benefit • Principal ensures appropriate compensation to the agent.
In fact, asymmetrical information always occurs in the company. Management (agent) dominates information rather than the principal (Yushita, 2010). This condition can produce some problems so that efficiencies contract more difficult to achieve. The relationship between agent and principal is always based on asymmetry information. Asymmetry information is an opportunity for agents to act fraud on financial statements. Fraud on financial statement do with window dressing or manipulated figure on the financial report. Performance of company appears optimal rather than actual. This action can be detrimental to the principal. Utilizing company assets out of contract and engineering company performance part of a fraud on management activities.

FRAUD
Fraud has various meanings which in essence are crimes by using intelligence with benefit for personal or group. Fraud is generally committed by a person or organization (Albrecht, 2012). Fraud is a crime that uses manipulation to get profit to a group or individual (Well, 2017). The action of fraud has four elements: 1. False statement to describes the subject. 2. The perpetrator well knows the error in the disclosed statement. 3. Victims have confidence in the false statements disclosed.

Damage and loss to victims
Fraud is an act through deliberate misuse and use of any resources for personal gain (ACFE, 2018). ACFE classifies fraud into three-part:

Asset Misappropriation
Misuse of assets is a form of fraud that is easiest to detect because of its tangible or measurable nature.

Corruption
Corruption is an act of fraud committed by employees to abusing authority or manipulate business transactions to get gain direct or indirect.

Financial Statement Fraud
Fraudulent financial statements are deliberate misstatements and omissions to cover the actual financial condition by inflating assets, recording false income, or undervalue expense reports.

FINANCIAL STATEMENT FRAUD
Fraud in financial statements is defined as an intentional material misstatement of financial reporting (Center for Audit Quality (CAQ), 2010). Financial statement fraud is a deliberate act by manipulating the company asset and business transactions for personal gain or company interest. Johnstone et al (2014) state that fraudulent financial statements are not only carried out for personal gain but also to cover poor financial conditions in the company. Fraud of financial reporting often carried out in three ways: 1. Manipulation, falsification, or alteration of accounting records and supporting documents.

Misstating or omitting transactions and other important information. 3. Misapplication of accounting principles.
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FRAUD TRIANGLE
The theory of the fraud triangle was first proposed by Cressy (1953). The theory of the fraud triangle based on the results of interviews with 200 people jailed for embezzlement of funds. Cressy believed that fraud had 3 elements: 1. Pressure The pressure is a condition that occurs within an organization or in an individual's life (Vona, 2008). Pressure from incentives or motivation will create conditions to motivate the perpetrators of fraud to commit theft, usually, the motivation is financial needs (Singleton, 2010).

Opportunity
Fraud will occur if there is an opportunity (Johnstone, 2014). Lack of control will produce the opportunity to act a crime. The fraudsters stated that their action exposed will be low if control of management not enough strong.

Rationalization
Rationalization is one element that is difficult to indicate because it relates to individual ethics. The perpetrator view that fraud committed as a rational action and does not violate ethics (Vona, 2008).

STATEMENT ON AUDITING STANDARTS NUMBER 99 (SAS NO.99)
AICPA published SAS No.99 in 2002 as guidelines, the concept and requirements for auditors to detect fraud (Skousen, 2009). SAS No. 99 session 31 notes that fraud is difficult to detect. The auditors must be able to identify conditions of pressure that produce fraud and conditions that increase the opportunity for fraud either rationalization. SAS No.99 also explains some of the conditions that can increase of fraud risk.

HYPOTHESIS
Financial stability is one condition in a financial company without any distress (Handoko, 2019). According to SAS No.99, financial stability will be threatened due to economic, industrial, and company operational. The management strives to improve performance despite under pressure. Management tries to deal with the various pressures that exist in the company. This pressure aims to keep the company's performance increasing. Sometimes the actual management performance under expectation forms the predetermined plan. Management in overcome these pressures with positive and negative actions. Negative action by committing fraud on financial statements one of the ways management action to fulfill performance targets.
The greater the total assets the greater potential for financial statement fraud (Skousen et al, 2009). These results are in line with studies conducted by Bawekes et al (2018), Husmawati et al (2017), Handoko (2019) which show that the ratio of changes in total assets has a positive effect on fraudulent financial statements. Based on the above description, the following hypothesis can be formulated:

Ha1: Financial stability has a positive effect on fraudulent financial statements
The financial targets are pressure conditions given by directors or shareholders to fulfill the current obligations and long-term obligations (Indarto and Ghozali, 2016). Pressure conditions were taken by management to push any action. Management tries to fulfill its financial obligations. However, sometimes the ability to fulfil these obligations cannot be fulfilled immediately. Sometimes management uses a shortcut way likes financial statement manipulation to report fake company performance.
The return of assets (ROA) can be used as financial targets for companies in the next period (Skousen et al, 2009). Companies with high yields and increasing ROA at each period would increase share prices and attract investors. ROA will differentiate between companies to do fraud and it does not (Summers and Sweeney's, 1998). Studies conducted by Akbar (2017), Surjaatmaja (2018), Sunardi and Amin (2018) show that financial targets using ROA have a positive effect on fraudulent financial statements. The higher the ROA targeted by management, the more potential management to manipulate financial statements. Based on the description above, the following hypothesis can be formulated:

Ha2 : Financial targets has a positive effect on fraudulent financial statements
The nature of the industry is an ideal condition for an organization (Husmawati et al, 2017). The nature of the industry is a condition that is influenced by subjective estimation by management (SAS No.99) Putriasih et al. (2016), Rukmana (2018), andYendrawati et al (2019) show that the nature of industry calculated using inventory (INVENTORY) has a positive effect on fraudulent financial statements. The high ratio of inventory to financial reports increases the potential for financial statement fraud. Based on the description above, the following hypothesis can be formulated:

Ha3 : Nature of industry has a positive effect on fraudulent financial statements
Ineffective monitoring is a condition where the company has weak and ineffective supervision from the commissioners or internal control body. Weak supervision will provide opportunities for management to commit fraud. Skousen (2004) explains that independent commissioners function will carry out supervision and minimize fraud against financial statements. Studies by Rukmana (2018), Syahputra, and Erlina (2019) show that effective monitoring proxied by the proportion of the number of independent commissioners has a positive effect on fraudulent financial statements. The smaller the ratio of the independent board of commissioners, the less effective the supervision of company performance and the higher the fraudulent manipulation of financial statements by management. Based on the description above, the following hypothesis can be formulated:

Ha4 : Ineffective monitoring has a positive effect on fraudulent financial statements
Rationalization is an individual ethic that rationalizes fraud and overrides the needs of others to achieve its goals. The perpetrator of fraud has the view that fraud committed is a rational actor and does not violate ethics (Vona, 2008: 7). Management do manipulates financial statements will change auditors' opinions to minimize the disclosure of the manipulation (Lou and Wang, 2009). Based on Government Regulation Number 20 of 2015 article 11 paragraph 1, it is clear that each company is only allowed to use audit services for its financial statements by the same public accountant for a maximum of 5 consecutive financial years.
Research conducted by Wahyuni and Budiwitjaksono (2017), Premananda et al (2019), and Syahria et al (2019) show that rationalization proxied by a change of auditor has a positive effect on fraudulent financial statements. Based on the description above, the following hypothesis can be formulated: Ha5 : Rationalization has a positive effect on fraudulent financial statements FRAMEWORK Figure 3. Framework

DEPENDENT VARIABLE
Financial report fraud is measured using the Beneish M-Score by calculating eight financial ratios which are then formulated into the Beneish M-Score formula. The company will be indicated to have committed fraudulent financial statements if the results of the M-Score calculation show a value of M> -2.22. Companies indicated to have committed fraud were given a score of 1 while companies that had no indication of committing fraud were given a score of 0.  Beneish, 1999

INDEPENDENT VARIABLE
The independent variables in this research are elements contained in the fraud triangle, namely pressure proxied by financial stability and financial targets, opportunities proxied by nature of the industry, and ineffective monitoring and rationalization.  (2020) The variable of financial statement fraud is calculated by using the Beneish  The rationalization variable is calculated using CPA (auditor change) using a dummy variable, namely the value of 1 for companies that have changed auditors and the value of 0 for companies that do not change auditors, so the lowest value (minimum) is 0 and the highest value (maximum) is 1. The average value (mean) was 0.378 and the standard deviation was 0.48537.  (2020) Based on the results of the t-test, financial stability has a t count of 5.980394 with a significance level of 0.0000. This shows that t count is greater than t table (5.980394> 1.66123) with a significance value (0.0000 <0.05), so H0 is rejected, and Ha is accepted, which means that financial stability has a significant positive effect on financial statement fraud. The results of this study support the research conducted by Skousen et al. (2009), Husmawati et al. (2017, Handoko and Natasya (2019), and Syahputra and Erlina (2019). The results of this study indicate that the greater the ratio of changes in total assets, the higher the potential for financial statement fraud. The managers face pressure to commit fraudulent financial statements when financial conditions are unstable, which will reduce the company's performance and hinder the flow of future company investment funds. This pressure will encourage management to do fraudulent financial statements to create the company's performance to appear optimum.  Putriasih et al. (2016), Akbar (2017), Surjaatmaja (2018), Sunardi and Amin (2018). The results of this study, the higher the ROA that is charged to management, the potential level of the company do financial reporting fraud will increase. Financial targets that achieved by the company put pressure on management to get its performance have been determined by the company. Fraudulent financial statements taking by management will make the company appear in accordance with predetermined financial targets.
Nature of industry has a P-value of 2.087980 with a significance level of 0.0373. This shows that P-value is greater than t is rejected, and Ha is accepted, which means that the nature of the industry has a significant positive effect on financial statement fraud. The results of this study support the research conducted by Putriasih et al. (2016), Rukmana (2018), andYendrawati et al, (2019). The results of this study explain that the higher the inventory value, the potential for management to do fraud. Management does the windows dressing with an Inventory account that has a significant value in the statement of financial position. In addition, inventory is an asset that is easily cashed and prone to theft.
Ineffective monitoring has a P-value of 0.162321 with a significance level of 0.8711. The P-value is smaller than T-table (0.162321 <1.66123) with a significance value (0.8711> 0.05), then H0 is accepted, and Ha is rejected, which means that effective monitoring has no effect on fraudulent financial statements. The results of this study support research conducted by Yesiariani and Rahayu (2017), Wahyuni and Budiwitjaksono (2017), and Bawekes et al. (2018). The results of this study that the value of ineffective monitoring will not affect the occurrence of fraudulent financial statements or that a large number of independent boards of commissioners cannot prevent financial statement fraud. The appointment of an independent board of commissioners by the company is only a formality to comply with regulations from the IDX and fulfill good corporate governance (Bawekes et al., 2018).
Rationalization has a P-value of 0.287080 with a significance level of 0.7742. This indicates that the P-value is smaller than T-table (0.287080 <1.66123) with a significance value (0.7742> 0.05), then H0 is accepted, and Ha is rejected, which means that rationalization has no effect on fraudulent financial statements. The results of this study support research conducted by Lou and Wang (2009), Santoso and Surenggono (2018), and Septriyani and Handayani (2018

CONCLUSION
The pressure variable with financial stability as a proxy calculated using ACHANGE has a significant positive effect on fraudulent financial statements. The results of the study support the first hypothesis which states that financial stability has a positive effect on fraudulent financial statements. The pressure variable with the financial target's proxy calculated using ROA has a significant positive effect on fraudulent financial statements. The results of this study support the second hypothesis which states that financial targets have a positive effect on fraudulent financial statements.
The opportunity variable with the nature of industry proxy calculated using INVENTORY has a significant positive effect on fraudulent financial statements. The results of this study support the third hypothesis which states that the nature of the industry has a positive effect on fraudulent financial statements. The opportunity variable with ineffective monitoring proxies calculated using BDOUT has no effect on fraudulent financial statements. The results of this study do not support the fourth hypothesis which effective monitoring has a positive effect on fraudulent financial statements. The rationalization variable with the proxy of change of auditor has no effect on fraudulent financial statements. The results of this study do not support the fifth hypothesis.

SUGGESTION
Further study is expected to add other variables that affect financial statement fraud. Increase the time span of observations in order to obtain more significant results. It is expected to use other proxies in measuring financial statement fraud to get better results. Add a number of sample companies more suggested for generalization of result study and use a 5% error rate to get the results are more accurate.