The Impact of Individual Morality, Internal Control, and Obedience to Accounting Rules on Financial Statement Fraud : Evidence Local Governments in Indonesia
Siti Noor Khikmah, Abdul Rohman, Indira Januarti

Universitas Muhammadiyah Magelang

Abstract

The purpose of this paper is to examine and analyze the association between the individual morality, internal control and financial statement fraud and whether the obedience to accounting rules play a role in moderating the relationship. This paper uses a Moderated Regrestion Analysis (MRA) method with total observation to 71 copies of 21 subdistrict and 5 village at Magelang district. The finding of this paper shows has not the association between internal control, individual morality and financial statement fraud. Next, when this paper interact individual morality and financial statement fraud is not moderated by obedience to accounting rules. The significant positive relationship between internal control and financial statement fraud is moderated by obedience to accounting rules. This findings show that obedience to accounting rules play an important role between internal control and financial statement fraud and thus these findings are expected to inform regulatory bodies on the role of obedience to accounting rules in financial reporting, which in turn can assist in regulatory reforms and inform the Good Corporate Governance

Keywords: Financial Statement Fraud, Internal Control, Obedience to Accounting Rules, Individual Morality.

Topic: Economics