FRAUDULENCE DETECTION MODEL IN BANKING SECTOR: INDONESIAN BANKS BUKU 1 LISTED ON INDONESIA STOCK EXCHANGE

Abstract

The research was conducted due to the lack fraud detection tool in banking sector. Financial statement fraud caused the greatest loss among other frauds and often is not uncovered yet. There were also accounting distortions in banks’ financial statements those are the deviances that occur between the reported financial statement and the real business operations which could hinder the true condition of the banks’ performances. These facts make researcher conducted this research with aim to concept a model to detect fraud in Indonesian banks that is useful, relevant, and practicable using accounting distortion in a form of financial statements restatement as fraud probability indication and to explain the relationship of FDIC ratios with fraud probability itself. The research consists of BUKU banks I which include seven banks listed in Indonesia Stock Exchange. The probability of fraud modified model is made using EViews regression tool. The result is consistent with extant researches that performance ratios and growth ratios can be used to detect fraud. The distortion happened due to the changes in PSAK exist in 6 out of 7 banks. The limitations of this research could be overcome by future researcher by using other BUKU banks which will add the sample size and also extend the period being studied to five or more years to provide more generalize result.