On Tuesday, October 22nd, 2024, the Faculty of Economics and Business at Trisakti University held an Open Doctoral Promotion Session in the field of Economics with a concentration in Accounting at Campus A, Hendriawan Sie Building (S), 8th floor. In this event, Dr. Inugrah Ratia Pratiwi, S.E., M.Ak., Ak., CA. was declared to have passed as a doctor with a “Very Satisfactory” predicate, becoming the 152th graduate and she has completed this doctoral program for 3 years and 2 months.

The dissertation titled “The Influence of Fraud, Real Earnings Management, and Agency Cost on Fraudulent Financial Reporting with Prudence as a Moderating Variable (Modified Beneish Model with IFRS 16)”. This study creates a new formula for the Beneish Model as a proxy for fraudulent financial reporting particularly current developments in IFRS 16.

The session was chaired by Prof. Dr. Yolanda Masnita Siagian, M.M., CIRR., CMA, CPM (Asia), with the promoter Prof. Dr. Etty Murwaningsari, Ak., M.M., CA, and co-promoter Dr. Sekar Mayangsari, Ak., CA., CMA. The examination team consisted of Dr. Murtanto, M.Si., Ak., CA., CPIA., CCFA.; Dr. Muhammad Nuryatno, Ak., M.M., CA.; Dr. Melinda Malau, S.E., M.M., CBV., CFRM., CFA., CPA.; and Prof. Dr. H. Aminullah Assagaf, S.E., M.S., M.M., M.Ak.

Novelty: This research modified indicators of the Beneish Model (1999), eight financial ratios into nine ratios with add lease interest expense (LINTadj). According to Makarem, et al., (2022), interest expense contributes to zero-earnings discontinuity by manipulating funding activities that can potentially lead to bankruptcy in the future. Morales & Zamora (2018) consider the impact of IFRS 16 implementation attributing the implementation of this standard from three channels: changes in assets, liabilities, and interest expenses. In the eight financial ratios, Beneish has considered the factor of increasing assets through the Assets Quality Index (AQI) and increasing liabilities from the Leverage Index (LVGI) but has not considered the interest expense factor which can have a significant impact on the company’s going concern by signaling solvency immediately. Hence, the novelty in this study adds and adjusts the lease interest expense ratio (LINTadj) and finds the coefficient for novelty in the new Beneish Model equation.
Research results (i) The main model and sensitivity state that financial targets, arrogance, and collusion have a positive effect on fraudulent financial reporting. Financial stability has a negative effect on fraudulent financial reporting. Prudence weakens the influence of financial stability, arrogance, and collusion on fraudulent financial reporting. Prudence strengthens the effect of ineffective monitoring on fraudulent financial reporting. (ii) Expansion 1: LINTadj has the highest level of significance thus the addition of novelty to the Beneish model associated with IFRS 16 in predicting fraudulent financial reporting from the audit side should be considered. Supporting the main test results, Financial stability has a significant positive effect on fraudulent financial reporting. When companies maintain financial stability, it has a multiplier effect in preserving the level of risk and minimizing fraud. (iii) Expansion 2: From the auditing perspective, the higher intensity of fraud will open up opportunities for fraudulent financial reporting.

With this achievement, Dr. Inugrah Ratia Pratiwi, S.E., M.Ak., Ak., CA. is expected to make a significant contribution in the field of financial accounting to develop fraudulent financial reporting measurements which are categorized as fraud detection and prevention that support the sustainability of companies in the future not only in Indonesia but also, for countries that have applied IFRS 16.