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Fraud causes trillions of rupiah in losses in the business world. With the fraud pentagon lens, this study aims to examine whether pressure, opportunity, rationalization, capability and arrogance affect fraudulent financial reporting. This study used 51 financial reports from fraud companies indicated by the Financial Services Authority and 51 financial reports from other companies in similar industry, listed on the Indonesian Stock Exchange from 2009 to 2018. The proxies of fraud pentagon were tested by using the logistic regression. The results showed that pressure, opportunity and rationalization had significant effects on fraudulent financial reporting. Meanwhile, capability and arrogance have no effect. These results indicate that the existence of pressure and rationalization can lead to financial fraud, but opportunity negatively affect fraudulent financial reporting. The results of this study contribute to the development of accounting science and to provide information on the prevention and detection of fraud in companies. Abstrak Fraud menyebabkan kerugian di dunia bisnis yang mencapai triliunan rupiah. Dengan bingkai fraud pentagon , penelitian ini bertujuan untuk menguji apakah pressure, opportunity, rationalization, capability dan arrogance mempengaruhi terjadinya kecurangan pada laporan keuangan. Penelitian ini menggunakan 51 laporan keuangan dari perusahaan yang terindikasi fraud dari Otoritas Jasa Keuangan dan 51 laporan keuangan dari perusahaan sejenis yang tercatat di Bursa Efek Indonesia sebagai pembanding mulai dari tahun 2009 hingga 2018. Hubungan antar variabel diuji dengan menggunakan regresi logistik. Hasil penelitian menunjukkan bahwa variabel pressure, opportunity, dan rationalization berpengaruh terhadap fraudulent financial reporting , sedangkan capability dan arrogance tidak berpengaruh terhadap fraudulent financial reporting . Hasil tersebut menunjukkan bahwa adanya pressure dan rationalization mendorong perusahaan melakukan kecurangan pada laporan keuangan, sedangkan opportunity berpengaruh negatif terhadap tindak kecurangan pada laporan keuangan. Hasil penelitian ini berkontribusi dalam pengembangan ilmu akuntansi serta untuk memberikan informasi mengenai pencegahan dan mendeteksi adanya fraud di perusahaan.

The purpose of this research is to investigate whether the fraud pentagon theory predictors, namely: Pressure, Opportunity, Rationalization, Capability and Arrogance able to explain the probability of financial statement of fraud occurrence in Indonesia. The results show that: only Pressure and Rationalization elements can define the likelihood of financial statement fraud. The Capability and Arrogance proxies proposed in this research are not proven to explain the opportunities for financial statement fraud. This research finding shows that the fraud pentagon theory still needs testing in different contexts.

This research aimed at knowing factors offraudulent financial reporting using pentagon fraudanalysis. This research analyzed the influence offinancial target, financial stability, external pressure,institutional ownership, ineffective monitoring, quality ofexternal auditors, change of auditors, change ofdirectors, and number of CEO’s picture in fraudulentfinancial report. Sample in this research were 14 gopublic government companies from 2013 to 2017.Source of data in this research were secondary data inform of annual report in official website of IndonesiaStock Exchange. The examination of this research usedlogistic regression. The result of this study showed thatthe influence of external pressure expected fraudulentfinancial report, while financial target, financial stability,institutional ownership, ineffective monitoring, quality ofexternal auditors, changing auditors, changing directors,and a number of CEO’s picture often did not influencethe fraudulent financial reporting. .