Arief Darmawan (1), Ali Rahman Reza Zaputra (2), Marlina Marlina (3)
General Background: Fraudulent Financial Reporting undermines financial reliability and investor confidence. Corporate governance and internal audit are key mechanisms to reduce fraud risk. Specific Background: In the technology sector, rapid growth, uncertainty, and performance pressure—especially during the “tech winter”—increase incentives for earnings manipulation, raising doubts about governance effectiveness. Knowledge Gap: The effectiveness of governance and internal audit remains unclear due to inconsistent findings and reliance on disclosure-based measures. Research on Indonesia’s technology sector is still limited. Objective: This study examines the relationship between Good Corporate Governance, internal audit effectiveness, and fraudulent financial reporting in Indonesian technology companies during the 2022–2024 period. Method : Using 93 firm-year observations from 31 listed firms by employs disclosure-based indices to measure governance and internal audit effectiveness while the Beneish M-Score is used to identify the likelihood of financial statement manipulation. Multiple regression analysis is applied to evaluate the relationship between the variables. Results : The findings reveal that neither corporate governance nor internal audit effectiveness has a significant effect on fraudulent financial reporting. Furthermore, the model demonstrates relatively low explanatory power, suggesting that financial reporting fraud may be influenced more strongly by other organizational or financial factors. These results also indicate that governance practices within the sector may tend to emphasize formal compliance rather than substantive monitoring effectiveness. Novelty : This study challenges agency theory assumptions and highlights the limitations of disclosure-based proxies in capturing actual governance effectiveness. Implications: Formal compliance alone is insufficient to prevent fraudulent financial reporting. Companies should improve the quality of governance implementation and regulators should adopt quality-based supervision approaches and investors are encouraged to complement governance assessments with forensic financial analysis.
Abbott, L. J., Daugherty, B., Parker, S., & Peters, G. F. (2016). Internal Audit Quality and Financial Reporting Quality: The Joint Importance of Independence and Competence. Journal of Accounting Research, 54(1), 3–40. https://doi.org/10.1111/1475-679X.12099
Achmad, T., Ghozali, I., Helmina, M. R. A., Hapsari, D. I., & Pamungkas, I. D. (2022). Detecting Fraudulent Financial Reporting Using the Fraud Hexagon Model: Evidence from the Banking Sector in Indonesia. Economies, 11(1), 5. https://doi.org/10.3390/economies11010005
Adam, S. H., Eltahir, I. A. E., Alnor, N. H. A., Taha, M. A., & Musa, E. H. E. (2025). The Added Value of Audit Committees within the Framework of Smart Auditing to Reduce Profitability Management Practices in Banks-Evidence from Saudi Arabia. WSEAS Transactions on Business and Economics, 22, 2337–2350. https://doi.org/10.37394/23207.2025.22.184
Afzal, M., Wu, Q., Ullah, M. R., Khan, M. J., & Ahmed, M. (2025). The performance payoff: Why audit quality, business processes and internal controls matter. Business Process Management Journal, 1–22. https://doi.org/10.1108/BPMJ-06-2025-0905
Alabdullah, T. T. Y., Ahmed, E. R., & Muneerali, M. (2019). Effect of Board Size and Duality on Corporate Social Responsibility: What has Improved in Corporate Governance in Asia? Journal of Accounting Science, 3(2), 121–135. https://doi.org/10.21070/jas.v3i2.2810
Anggraini, L. D., & Faradillah. (2022). Fraud Detection: Application of COSO on Auditing Accounting Information Systems in Plantation Companies. Journal of Accounting Science, 6(2), 102–109. https://doi.org/10.21070/jas.v6i2.1607
Anisykurlillah, I., Januarti, I., & Zulaikha, Z. (2022). The role of the audit committee and employee well-being in controlling employee fraud. Journal of Governance and Regulation, 11(4), 168–178. https://doi.org/10.22495/jgrv11i4art16
Azizah, S., & Reskino, R. (2023). Pendeteksian Fraudulent Financial Statement: Pengujian Fraud Heptagon Theory. Jurnal Akuntansi dan Governance, 4(1), 17-37. https://doi.org/10.24853/jago.4.1.17-37
Bari, A. H. A., Abed, R. A., Kahdim, R. M., Hasan, H. F., Sharaf, H. K., & Alwan, A. S. (2024). The role of internal auditing in corruption control and enhancing corporate governance: a board of directors’ outlook. Corporate Board: Role, Duties and Composition, 20(2), 120–127. https://doi.org/10.22495/cbv20i2art12
Bonrath, A., & Eulerich, M. (2024). Internal auditing’s role in preventing and detecting fraud: An empirical analysis. International Journal of Auditing, ijau.12342. https://doi.org/10.1111/ijau.12342
Dauth, T., Pronobis, P., & Schmid, S. (2017). Exploring the link between internationalization of top management and accounting quality: The CFO’s international experience matters. International Business Review, 26(1), 71–88. https://doi.org/10.1016/j.ibusrev.2016.05.007
Desiana, L., Alfaridzie, M. R. R., & Akbar, D. A. (2021). Corporate Governance dan Shariah Compliance Terhadap Financial Statement Fraud Pada Bank Umum Syariah. Journal of Accounting Science, 5(2), 176-193. https://doi.org/10.21070/jas.v5i2.1342
Dewi, A., & Kartikasari, E. D. (2021). Peran Moderasi Komitmen Profesional terhadap Perilaku Reduksi Kualitas Audit Periode Pandemi Covid-19. Journal of Accounting Science, 6(1), 15–27. https://doi.org/10.21070/jas.v6i1.1591
Halbouni, S. S. (2015). The Role of Auditors in Preventing, Detecting, and Reporting Fraud: The Case of the United Arab Emirates (UAE). International Journal of Auditing, 19(2), 117–130. https://doi.org/10.1111/ijau.12040
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kabuye, F., Nkundabanyanga, S. K., Opiso, J., & Nakabuye, Z. (2017). Internal audit organisational status, competencies, activities and fraud management in the financial services sector. Managerial Auditing Journal, 32(9), 924–944. https://doi.org/10.1108/MAJ-09-2016-1452
Kristof‐Brown, A. L., Zimmerman, R. D., & Johnson, E. C. (2005). CONSEQUENCES OF INDIVIDUALS’ FIT AT WORK: A META‐ANALYSIS OF PERSON–JOB, PERSON–ORGANIZATION, PERSON–GROUP, AND PERSON–SUPERVISOR FIT. Personnel Psychology, 58(2), 281–342. https://doi.org/10.1111/j.1744-6570.2005.00672.x
Liu, W., Wang, Z., & Zhang, X. (2025). Research on financial fraud detection by integrating latent semantic features of annual report text with accounting indicators. Journal of Accounting and Organizational Change, 21(5), 841–866. https://doi.org/10.1108/JAOC-06-2024-0199
Lonto, M. P., Sukoharsono, E. G., Baridwan, Z., & Prihatiningtias, Y. W. (2023). The Effectiveness of Internal Audit for Fraud Prevention. Australasian Accounting, Business and Finance Journal, 17(3), 171–190. https://doi.org/10.14453/aabfj.v17i3.11
Maulani, S. N., Amalia, P. S., & Birton, M. N. A. (2024). Can GCG Moderates The Influence of Internal Control and Integrity towards Fraud Prevention? Journal of Accounting Science, 8(1), 1–21. https://doi.org/10.21070/jas.v8i1.1731
McLaughlin, C., Armstrong, S., Moustafa, M. W., & Elamer, A. A. (2021). Audit committee diversity and corporate scandals: Evidence from the UK. International Journal of Accounting and Information Management, 29(5), 734–763. https://doi.org/10.1108/IJAIM-01-2021-0024
Mehta, K., Batra, B., Sannegadu, R., & Shukla, V. K. (2023). The effectiveness of blockchain in dismantling the fraud triangle in accounting and auditing. In V. K. Shukla, S. Vyas, S. Gupta, & S. Dubey (Eds.), Emerging applications of blockchain technology (pp. 179–193). Nova Science Publishers. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85178622309&partnerID=40&md5=655856426815e3d08a066af5fa59ba2f
Merter, A. K., & Özer, G. (2024). Audit Committee and Timely Reporting: Evidence From Turkey. SAGE Open, 14(1), 21582440241239516. https://doi.org/10.1177/21582440241239516
Mousavi, M., Zimon, G., Salehi, M., & Stępnicka, N. (2022). The Effect of Corporate Governance Structure on Fraud and Money Laundering. Risks, 10(9), 176. https://doi.org/10.3390/risks10090176
Norman, C. S., Rose, A. M., & Rose, J. M. (2010). Internal audit reporting lines, fraud risk decomposition, and assessments of fraud risk. Accounting, Organizations and Society, 35(5), 546–557. https://doi.org/10.1016/j.aos.2009.12.003
Novianti, D. R. M., Habbe, A. H., & Nirwana, N. (2022). Analisis Pengaruh Fraud Pentagon Terhadap Fraudulent Financial Reporting Menggunakan Beneish Model. Bongaya Journal of Research in Accounting (BJRA), 5(2), 61–69. https://doi.org/10.37888/bjra.v5i2.367
Perry, L. M., & Bryan, B. J. (1997). Heightened responsibilities of the internal auditor in the detection of fraud. Managerial Finance, 23(12), 38–43. https://doi.org/10.1108/eb018660
Popa (Sabău), A., Achim, M. V., & Teusdea, A. C. (2024). Corporate governance and financial fraud occurrence – case study on Romanian companies. Journal of Risk Finance, 25(3), 489–509. https://doi.org/10.1108/JRF-10-2023-0257
Putri, A. V., & Prasetyo, K. (2020). The Effect of Good Corporate Governance Mechanism on Earnings Management in Lq-45 Companies. Contemporary Economics, 14(4 Special issue), 545–554. https://doi.org/10.5709/ce.1897-9254.426
Rehman, A., & Hashim, F. (2020). Impact of Fraud Risk Assessment on Good Corporate Governance: Case of Public Listed Companies in Oman. Business Systems Research, 11(1), 16–30. https://doi.org/10.2478/bsrj-2020-0002
Sari, D. E., Asila, N. F., Mustofa, R. H., Suranto, Jatmika, S., Ahmad, N. L., Setianingrum, S., & Fadhilah, R. (2025). Using the Fraud Triangle framework to explore the impact of information technology misuse on academic fraud in accounting education: Evidence from Indonesia. Cogent Education, 12(1), 2476302. https://doi.org/10.1080/2331186X.2025.2476302
Sugita, S., & Khomsiyah, K. (2023). Pengaruh Good Corporate Governance dan Whistleblowing System Terhadap Fraud pada Perusahaan Perbankan yang Terdaftar di Bursa Efek Indonesia. Jurnal sosial dan sains, 3(7), 686–697. https://doi.org/10.59188/jurnalsosains.v3i7.950
Suryandari, D., Hidayah, R., Ranihusna, D., Aulia, I., Basher, S. R., Kayati, I. N., Hasna, S. I., Nugraha, S. A. A., & Rohmah, F. T. (2024). IS THE BOARD OF DIRECTORS ASSOCIATED WITH EARNING MANAGEMENT STRATEGY? THE ROLE OF THE AUDIT COMMITTEE. Corporate Board: Role, Duties and Composition, 20(2), 8–19. https://doi.org/10.22495/cbv20i2art1
Tiron-Tudor, A., Faragalla, W. A., & Pianoschi, A. (2025). The role of the accountancy professionals in detecting and preventing fraud, in a digital landscape: A systematic literature review. Digital Finance, 7(4), 745–786. https://doi.org/10.1007/s42521-025-00138-3
Vadasi, C., Bekiaris, M., & Koutoupis, A. G. (2021). The impact of audit committee characteristics on internal audit professionalization: Empirical evidence from Greece. Accounting Research Journal, 34(5), 447–470. https://doi.org/10.1108/ARJ-05-2020-0091
Žager, L., Tušek, B., & Sever Mališ, S. (2014). External auditing in the function of managing financial reporting risks. In D. Miloš Sprčić (Ed.), Risk management: Strategies for economic development and challenges in the financial system (pp. 197–220). Nova Science Publishers. https://novapublishers.com/shop/risk-management-strategies-for-economic-development-and-challenges-in-the-financial-system/
Zaidi, A. U. (2024). A Guide for Statistical Tests and Interpretations with SPSS https://doi.org/10.4324/9781003215691