Ethical values and auditors fraud tendency perception: testing of fraud pentagon theory

Widya Ais Sahla, Ardianto Ardianto

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

Purpose: This study aims to examine the fraud tendency on the perception of external auditors triggered by five components of the fraud pentagon: pressure (P), opportunity (O), rationalization (R), competence (C) and arrogance (A). In addition, ethical values (EV) are placed as a moderating variable for this relationship. Design/methodology/approach: This is a quantitative study with a survey to external auditors around Indonesia. A moderation model for a research framework was developed to investigate the moderating role of ethical values. Findings: The findings have shown that the five components of the fraud pentagon theory are not fully proven as triggers of fraud in the perception of external auditors. Only C and A have a significant value in influencing the perception of fraud tendency (PFT). Other findings also provide evidence that EV moderate the relationship between C and A to PFT. This shows that EV can be used as an anti-fraud strategy in the external auditor environment. Originality/value: The originality of this paper is one of the first study that examines the fraud pentagon theory in the field of behavioral accounting. In addition, this paper contributes to the integration of ethical values as an anti-fraud strategy in the external auditor environment.

Original languageEnglish
Pages (from-to)966-982
Number of pages17
JournalJournal of Financial Crime
Volume30
Issue number4
DOIs
Publication statusPublished - 24 May 2023

Keywords

  • Ethical values
  • Fraud pentagon theory
  • Fraud tendency

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