The Role Of Good Corporate Governance And Audit Committee In Reducing Fraud With Hexagon Fraud Analysis

Abstract

The study investigates the role of Good Corporate Governance (GCG) and the Audit Committee in reducing fraud, using Hexagon Fraud Analysis. The sample consists of 22 agricultural sector companies selected through purposive sampling from www.idx.co.id and the companies' websites. Research sampling using purposive sampling. Dependent variable is Fraud variable. Independent variables are pressure, opportunity, razionalization, competence, arrogance, collusion, good corporate governance, audit committee. The study finds that pressure, opportunity, and collusion have a positive effect on fraud, while competence (change of directors) has a negative effect on fraud. GCG and Audit Committee do not moderate the relationship of pressure, opportunity, and collusion to fraud. However, GCG and Audit Committee, along with improving competence, can reduce the occurrence of fraud. The study implies that companies must reduce pressure, opportunities, and collusion, improve competence, and establish good corporate governance and audit committees to reduce fraud. The implications of practice, companies must reduce the presence of pressure, opportunities and collusion to reduce the occurrence of fraud. Companies must also improve competence to reduce the occurrence of fraud. The study also contributes to the development of the theory of hexagon cheating.