Proceedings of the 2nd Universitas Kuningan International Conference on System, Engineering, and Technology, UNISET 2021, 2 December 2021, Kuningan, West Java, Indonesia

Research Article

Can Financial Ratios Detect Fraudulent Financial Reporting?

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  • @INPROCEEDINGS{10.4108/eai.2-12-2021.2320350,
        author={Enggar Diah Puspa Arum and Ilham  Wahyudi and Widya Sari Wendry},
        title={Can Financial Ratios Detect Fraudulent Financial Reporting?},
        proceedings={Proceedings of the 2nd Universitas Kuningan International Conference on System, Engineering, and Technology, UNISET 2021, 2 December 2021, Kuningan, West Java, Indonesia},
        publisher={EAI},
        proceedings_a={UNISET},
        year={2022},
        month={8},
        keywords={financial reporting; ratio; cash flow},
        doi={10.4108/eai.2-12-2021.2320350}
    }
    
  • Enggar Diah Puspa Arum
    Ilham Wahyudi
    Widya Sari Wendry
    Year: 2022
    Can Financial Ratios Detect Fraudulent Financial Reporting?
    UNISET
    EAI
    DOI: 10.4108/eai.2-12-2021.2320350
Enggar Diah Puspa Arum1,*, Ilham Wahyudi1, Widya Sari Wendry1
  • 1: Accounting Department, Universitas Jambi, Jambi, Indonesia
*Contact email: enggar_diah@unja.ac.id

Abstract

This research was conducted to examine whether financial ratios can detect fraudulent financial reporting. The financial ratios analyzed are Days' Sales Outstanding Growth, Cash Flow from Operating Divided by Net Income, and Accounts Receivable Divided by Sales. The target population in this study was State-Owned Enterprises (BUMN) in Indonesia, particularly the Cluster of Insurance Services Industry and Pension Funds. The research data were analyzed by multiple linear regression method using eviews program. The results showed that the ratio of Days' Sales Outstanding Growth and the ratio of Accounts Receivable Divided by Sales had an effect on Fraudulent Financial Reporting. Meanwhile, the ratio of Cash Flow from Operating Divided by Net Income had no effect on Fraudulent Financial Reporting. This study proved that financial ratios can detect fraudulent financial reporting.