The audit committee as moderating the effect of hexagon’s fraud on fraudulent financial statements in mining companies listed on the Indonesia stock exchange

Figures & data

Table 1. Determination of the number of research samples

No.	Criterion	Excluding Criteria	Total
1.	Companies in the mining industry that are listed on IDX		219
2.	Companies in the mining sector that are not listed on the IDX continuously from 2018 to 2020	(25)	194
3.	Companies in the mining sector that don’t release full annual financial statements between 2018 and 2020	(5)	189
4.	The annual financial statements released between 2018 and 2020 lack complete data on research variables.	(16)	173
Number of units of analysis that qualify as research samples			173

Source: Processed Secondary Data (2022)

Table 2. Operational definition of variables

Variable Name	Variable Definition	Measurement	Scale
Fraudulent financial statement (FFS)	An act intentionally or basically to commit falsification of financial information to deceive users from financial statements.	F-Score = Accrual Quality + Financial Performance (Skousen et al., 2009)	Ratio
External Pressure (EP)	The pressure felt by the company (management) to obtain sources of funds from outside parties in the form of debt and capital.	LEV = $\frac{\mathit{\text{Total}} \mathit{\text{Liabilitas}}}{\mathit{\text{Total}} \mathit{\text{Aset}}}$ (Skousen et al., 2009)	Ratio
Change in Auditor (AC)	Auditor changes are changes that are assessed through changes in levels, not changes between one Public Accounting Firm to another.	Variables are given code 0 when changing from Bigfour to Non-bigfour, code 1 when changing from Non-big-four to Nonbig-four, code 2 when changing from Non-big four to Big four, as well as, code 3 when changing from Bigfour to Big four (Hapsari & Prasetyo, 2020)	Nominal
Nature of industry (NI)	An ideal condition experienced by the company and utilized by management to commit fraudulent acts	Receivable = $\frac{\mathit{\text{Receivable}} \left(t\right)}{\mathit{\text{Sales}} \left(t\right)}$—$\frac{\mathit{\text{Receivable}} \left(t-1\right)}{\mathit{\text{Sales}} \left(t-1\right)}$ (Skousen et al., 2009)	Ratio
CEO duality (CD)	Multiple positions that the CEO has in the company	Dummy variables, namely given code 1 if there is a duplicate position or affiliation relationship, and given a code of 0 if there is no duplicate position or affiliation relationship. (Abubakar et al., 2020)	Nominal
Change of Directors (DC)	The ability of individuals to commit fraud, namely through the change of the company’s board of directors	Dummy variable, namely code 1 for companies that make changes to directors during the 2018–2020 research period, and are given code 0 if they do not make changes to the board of directors during the 2018–2020 research period. (Sihombing & Rahardjo, 2014)	Nominal
Political Connection (PC)	The company’s relationship with political circles for profit.	Dummy variables, if the company has a political connection are coded 1, and if the company does not have a political connection are given a code of 0. (Fan et al., 2016)	Nominal
Audit Committee (AC)	Committees are established by and responsible to the Board of Commissioners in assisting in carrying out their duties and functions.	Number of Audit Committees (M. P. Sari et al., 2020)	Nominal
Growth (Gr)	Sales growth rate	GROWTH =$\frac{\begin{array}{c}(\mathit{\text{Total penjualan tahun sekarang}}-\\ \mathit{\text{total penjualan tahun sebelumnya}}\end{array}}{\mathit{\text{total}} \mathit{\text{penjualan}} \mathit{\text{tahun}} \mathit{\text{sebelumnya}}}$ (M. P. Sari et al., 2020)	Ratio

Table 3. The descriptive statistics result

Variable	Descriptive Statistics
N = 173	Mean	Minimum	Maximum	Std. Deviation
Dependent Variables
Fraudulent Financial Statement	−0.154534	−2.670211	2.678084	0.769743
Independent Variables
External Pressure	−0.322124	−2.752633	0.308734	0.391334
Change In Auditor	-	0	3	0.953024
Nature Of Industry	−1.221987	−4.045175	1.679921	0.820652
CEO Duality	-	0	1	0.501242
Change Of Directors	-	0	1	0.499024
Political Connection	-	2	1	0.488543
Audit Committee	-	5	2	0.478184
Growth	−0.222124	−1. 768,933	0.895279	0.2287494

Table 4. Analysis regression moderating results

Variables	Coefficient	Std. Error	t-Statistics	Prob.
C	0.192771	0.467172	0.412633	0.6804
Ep	−0.236316	0.207879	−1.136797	0.2573
Air conditioning	−0.062531	0.090697	−0.689455	0.4915
Ni	0.312619	0.071521	4.371032	0.0000
Cd	0.002432	0.160814	0.015122	0.9880
Dc	−0.180407	0.097151	−1.856974	0.0651
Pc	−0.031894	0.170358	−0.187217	0.8517
Ca	0.049382	0.149874	0.329493	0.7422
EP*CA	−0.177607	0.578435	−0.307047	0.7592
AC*CA	0.200981	0.156420	1.284883	0.2006
NI*CA	−0.330843	0.122960	−2.690660	0.0078
CD*CA	−0.363034	0.309714	−1.172156	0.2428
DC*CA	0.665975	0.222856	2.988357	0.0032
PI*CA	0.412971	0.302315	1.366030	0.1737
Gr	0.237485	0.394859	2.837484	0.0328

Table 5. Summary of hypothesis test results

	Variable	Coefficient	Prob α	Result
H1	External pressure significantly improves the likelihood of fraudulent financial statements.	−0.236316	0.2573	Rejected
H2	A strong beneficial impact on falsified financial statements is caused by changing auditors	−0.062531	0.4915	Rejected
H3	Fraudulent financial statements are significantly made more likely by the nature of the industry.	0.312619	0.0000	Accepted
H4	CEO duality significantly improves the likelihood of fraudulent financial statements.	0.002432	0.9880	Rejected
H5	A director’s change has a large favorable impact on fraudulent financial statements	−0.180407	0.0651	Rejected
H6	Financial statements that are fake are significantly influenced favorably by political connections.	−0.031894	0.7422	Rejected
H7	The audit committee weakens Pressure’s external relationship to fraudulent financial statements.	−0,177,607	0,7592	Rejected
H8	The audit committee decreases the relationship between auditors and falsified financial statements.	0,200,981	0,2006	Rejected
H9	The audit committee made it harder to draw a connection between the industry’s characteristics and the fraudulent financial statement	−0,330,843	0,0078	Accepted
H10	The CEO duality’s connections to fraudulent financial statements were diminished by the audit committee.	−0,363,034	0,2428	Rejected
H11	The relationship between the change in directors and fraudulent financial statements was diminished by the audit committee.	0,665,975	0,0032	Accepted
H12	The audit committee weakened the political connection to fraudulent financial statements.	0,412,971	0,1737	Rejected

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