Hexagon Fraud Assessment in Detecting Fraudulent Financial Reporting of Village Credit Institutions (LPD)

I Made Agus Putrayasa (), I Made Marsa Arsana, Made Dana Saputra, Kadek Nita Sumiari and I Ketut Suwintana
Additional contact information
I Made Agus Putrayasa: Politeknik Negeri Bali, Accounting Department
I Made Marsa Arsana: Politeknik Negeri Bali, Accounting Department
Made Dana Saputra: Politeknik Negeri Bali, Accounting Department
Kadek Nita Sumiari: Politeknik Negeri Bali, Accounting Department
I Ketut Suwintana: Politeknik Negeri Bali, Accounting Department

A chapter in Proceedings of the International Conference on Sustainable Green Tourism Applied Science - Social Applied Science 2024 (ICoSTAS-SAS 2024), 2024, pp 663-669 from Springer

Abstract: Abstract Village Credit Institutions (LPD) are village-owned financial institutions whose characteristics only exist in the province of Bali. The existence of LPDs refers to the Bali Governor’s regulation number 44 of 2017. In its development, which was first established in 1984 until May 2023, there were 1,439 in the entire province of Bali. Along with the journey of LPD management, acts of fraud were discovered in the LPD’s financial reports, which is detrimental to the community and undermines trust in the LPD. These can have an impact either directly or indirectly on other LPDs. The trigger for the emergence of fraud can start from opportunities, pressure, rationalization, capability, arrogance, and collusion, which is called fraud hexagons. This research aims to analyze fraud hexagons as an indicator of fraudulent financial reports of LPD. Data analysis was conducted using an interactive analysis model involving sources from academics, public accounting firms, and the regulatory agency that empowers village precredit institutions (LPPLD). The results of this research identify the practices carried out in fraudulent LPD financial reports, which refer to the elaboration of the fraud hexagon theory. Fraud hexagon can be used as an indicator to detect fraudulent financial reports of LPD. Pressure, capability, opportunity, rationalization, arrogance, and collusion can detect the potential for LPD fraud. Fraudulent acts on LPD financial reports tend to occur due to weak internal control, ineffective supervision, lack of clarity regarding the implementation of SOPs for all policies in LPD, and different interpretations of the implementation of LPD bookkeeping guidelines.

Keywords: Audit; Fraud Hexagon; LPD (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-622-2_73

Ordering information: This item can be ordered from
http://www.springer.com/9789464636222

DOI: 10.2991/978-94-6463-622-2_73

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().