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

DOI

10.2991/978-94-6463-622-2_73How to use a DOI?

Keywords

Audit; Fraud Hexagon; LPD

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.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - I Made Agus Putrayasa
AU  - I Made Marsa Arsana
AU  - Made Dana Saputra
AU  - Kadek Nita Sumiari
AU  - I Ketut Suwintana
PY  - 2024
DA  - 2024/12/31
TI  - Hexagon Fraud Assessment in Detecting Fraudulent Financial Reporting of Village Credit Institutions (LPD)
BT  - Proceedings of the International Conference on Sustainable Green Tourism Applied Science - Social Applied Science 2024 (ICoSTAS-SAS 2024)
PB  - Atlantis Press
SP  - 663
EP  - 669
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-622-2_73
DO  - 10.2991/978-94-6463-622-2_73
ID  - Putrayasa2024
ER  -