Financial Stability, Leverage, Ineffective Monitoring, Independent Audit Committee, and the Fraudulent Financial Statement

This study aims to develop prior empirical model research of factors influence toward fraudelent financial statement and determine some element of fraud triangle that are financial stability, Leverage , ineffective monitoring and one element of Good Corporate Governance that is independent audit committee influence to fraudulent financial statement. This research topic is important because investors need earnings information as a basic for making investment decision and fraudulent financial statement may affect quality of earnings information received by investors. Data obtained from financial statement of mining company period 2011-2015, data were analyzed with multiple linier regressions with 150 samples collected by purposive sampling technique. Then the authors used Micro soft Excel and SPSS version 24 for processing and analyzing samples. The results showed only financial stability that has a significant influence on fraudulent financial statement, while Leverage, ineffective monitoring and independent audit committee partially has not significant influence toward fraudulent financial statement.

This study aims to develop prior empirical model research of factors influence toward fraudelent financial statement and determine some element of fraud triangle that are financial stability, Leverage , ineffective monitoring and one element of Good Corporate Governance that is independent audit committee influence to fraudulent financial statement. This research topic is important because investors need earnings information as a basic for making investment decision and fraudulent financial statement may affect quality of earnings information received by investors. Data obtained from financial statement of mining company period 2011-2015, data were analyzed with multiple linier regressions with 150 samples collected by purposive sampling technique. Then the authors used Micro soft Excel and SPSS version 24 for processing and analyzing samples. The results showed only financial stability that has a significant influence on fraudulent financial statement, while Leverage, ineffective monitoring and independent audit committee partially has not significant influence toward fraudulent financial statement.
However there are cases where managers fail to achieve their performance goals so that the information that will appear in the financial Statement will not be satisfactory. So it is still often the case of mistakes and fraud in the context of recording and financial reporting to make the existence of the company stay awake, (Diany & Ratmono, 2014) Evidently, One form of fraud that occurred was done by PT Garda Tujuh Buana (GTBO) which suffered losses up to IDR. 21.52 billion in 2011, but in 2012 the financial report saw a profit of up to IDR .74 billion. After further observation, PT. GTBO divides revenue into three parts, one of which is miscellaneous sales of IDR. 711.15 billion, which is a down payment on the sales agreement of 10 million tons of coal whose new contract will be signed on June 14, 2012, (Indonesian Stock Exchange, 2017. Research conducted by Kurnia & Marsono, 2014) on external pressure and ineffective monitoring, on fraudulent financial Statement conducted on companies subject to sanctions from "Bapepam or Capital Market Supervisory Board" shows result that has not significant influence.
While Research on financial stability, personal financial need toward fraudulent financial statement in companies imposed sanction from "Bapepam" by Martantya & Daljono, 2013) showed only financial stability which significantly influence fraud financial report, while personal financial need has not significant effect on fraudulent financial Statement.
Furthermore, the study of an independent audit committee conducted by Handoko & ramadhani (2017) shows that the independent audit committee has not significant effect on financial reporting fraud.
A study conducted by Aprilia (2017)  This study is different with the research conducted by Hogan, C.E. et. al (2008)  2). GMI = Gross Margin Index. This is measured as the ratio of gross margin versus prior year. A firm with poorer prospects is more likely to manipulate earnings; 3). AQI = Asset Quality Index. Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets. AQI is the ratio of asset quality versus prior year; 4). year. This is used on the assumpton that analysts would interpret a disproportionate increase in sales as a negative signal about firms future prospects; 7). LVGI = Leverage Index. This measures the ratio of total debt to total assets versus prior year.

SGI = Sales Growth
It is intended to capture debt covenants incentives for earnings manipulation; 8).TATA=Total Accruals to Total Assets, This assesses the extent to which managers make discretionary accounting choices to alter earnings. Total accruals are calculated as the change in working capital accounts other than cash less depreciation."

Financial stability
In accordance with Statement on Auditing Standard (SAS) number 99 (AICPA, 2002), managers face pressures related to financial statement fraud when financial stability and / or profitability are threatened by economic, industrial or operating conditions, (Sihombing & Rahardjo, 2014). Where firms experience growth then it will be below the industry average so managers will manipulate financial Statement to look better. But with the rapid growth of the company will still manipulate the financial Statement for the growth looks more stable.
According to Darmawan & Sariati Oktoria Saragih (2017) that found a positive effect of variable quality auditor against fraudulent financial report, found a negative influence financial stability and financial variables against the target of fraudulent financial Statement. Financial stability is a company's financial condition from stable condition. The financial variable is proxy by using asset growth rate (ACHANGE). According to Martantya & Daljono (2013), while the formula of ACHANGE is Total Asset t minus Total Assett-1 devided Total Asset t.

Leverage
Financial leverage according to Subramanyam and Wild (2010) is a measurement of the relationship between total assets and ordinary equity capital used to fund assets. For companies that successfully use leverage, a high financial leverage ratio increases returns on equity. In line with this, the risk associated with changes in profitability is higher if the financial leverage ratio is higher, while Ferdinand & Setyarini Santosa (2018) found that leverage does not has significant effect on the fraudulent financial statement report. According to Aprilia (2017), Leverage is indicated by Total Liability devided Total Asset.

Ineffective Monitoring
The agency relationship will occur if the principal hires another person, in this case the agent to carr y out the work that has been dedicated by the principal. The agency relationship can cause some problems due to the asymmetry of information between the principal and the agent.
This information asymmetry can be a gap for fraud. In order to avoid fraud practices within the company, a supervisory unit is required to monitor the company's operations.
The widespread of accounting scandals and fraudulent practices is one of the effects of weak supervision by companies that have given an opportunity to act in accordance with their personal interests. With ineffective supervision, management will feel less closely monitored and more freely seeking ways to maximize its personal benefits. Therefore, to prevent the occurrence of fraud, other parties are required that Independent Board of Commissioners (Martantya & Daljono, 2013). Committee.

Population and Sample
The

Individual Parameter Significant Test (Test Statistic t)
Based on   Companies that have small assets or large assets but large cash outflows also have the opportunity to manipulate to make the company's financial stability looks good. In order to achieve financial target, companies will be encouraged to use accounting method that will increase or decrease the value of company asset such as fair value mechanism and asset capitalization, (Martantya & Daljono, 2013).