PENTAGON FRAUD AND FRAUDULENT FINANCIAL REPORTING WITH BENEISH M-SCORE MODEL IN BANKING INDUSTRY

Abstract

Using the Beneish M-Score model, this research examines the impact of pentagon fraud on the discovery on indications of financial statement fraud. This study uses logistic regression analysis for a sample of 46 banking companies listed on the Indonesia Stock Exchange from 2019-2021. The result of this study show that audit opinions and change in directors have a significant negative effect on fraudulent financial report. Fraudulent financial report is not effected by financial stability, external pressure, ineffective monitoring, digitalization, and frequent of CEO. This research contributes to the application of the Beneish M-Score model to identify indications of fraud in financial reports such as measured by the fraud pentagon elements.