Analysis of the Influence of Obedience to Accounting Rules, Employee

Borolla, Luciana., Anakotta, Fanny., Monika., Batkunde, Adonia., Anita./JoEBGC Vol. 4 No. 1 (2021) 83 - 87

JoEBGC Vol 4 No. 1, pp 83 – 87, 2021

Analysis of the Influence of Obedience to Accounting Rules, Employee Motivation and Management Morality on the Tendency of Accounting Fraud Borolla, Lucianaa , Anakotta, Fanny, Monika b, and Batkunde, Adonia, Anita c a Faculty of Economics and Business, PSDKU in Kab. Kep. Aru University of Pattimura, Indonesia. b Faculty of Economics and Business, University of Pattimura, Indonesia. c Faculty of Economics and Business, University of Pattimura, Indonesia.

ARTICLE INFORMATION ABSTRACT

Article history: Received date: 12 January 2021 This study aims to test empirically the effect of complying with accounting rules, Revised date: 26 February 2021 employee motivation and management morality on the tendency of accounting Accepted date: 15 March 2021 fraud with quantitative research methods. The object is the variable used in the study. The object of this research is the tendency of accounting fraud, obedience to accounting rules, employee motivation and management morality. The data Keywords: The Tendency of Accounting Fraud; collection technique used is through sending questionnaires to respondents. The Obedience to Accounting Rules; Employee data analysis technique used is quantitative data analysis technique using multiple Motivation and Management Morality. linear regression analysis. The results of this study indicate that compliance with accounting rules and management morality has a significant negative effect on the tendency of accounting fraud, while employee motivation has no significant effect on the tendency of accounting fraud.

 Corresponding author E-mail address: :a Luciana Borolla, email: [email protected] b Fanny Monika Anakotta, email: [email protected] c Adonia Anita Batkunde, email: [email protected]

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INTRODUCTION has a financial impact which is a finding of non- In general, fraud is a mistake commited on compliance with statutory provisions which results purpose. The concept of fraud is a deviation from in State losses (Source: Report on the Results of an accounting procedures that should be applied in a Audit of the Regional Government Financial entity. A rule is a action or deed that must be Report of the Aru Islands Regency for Fiscal Year carried out and must not be violated (Rahmawati, 2018). 2012). Given the importance of an entity’s financial Related to the above phenomena, rules are statements, the financial statements must be actions or guidelines that must be carried out. prepared as best as possible in accordance with Based on the cases that occurred within the scope accurate data in accordance with applicable of the Aru Islands Regency Regional Government, accounting rules. Wolk and Tearney (1997) in it can be said that the Regional Government has not Wilopo (2006) explain that failure in the obeyed the applicable rules so that accounting fraud preparation of financial statements due to non- occurred. Cheating is basically a deliberate attempt compliance with accounting rules will result in to use the rights of others for personal gain. company fraud that cannot be detected by auditors. Accounting fraud is a misstatement that arises from According to Simanjuntak (2008) in GONE fraud in the reporting of financial statement, theory, a person’s motivation for cheating is caused namely misstatement or deliberate omission of by a need. Everyone has material needs that can amounts or disclosures in financial statements to drive cheating. To fulfill these needs, people will deceive users of financial statements. do anything as long as their needs are met even by In the Pentagon’s theory of fraud, it is said cheating. Research by Kaukab and Damayanti there are several motivations for someone to (2015) shows that individual morality affects the commit fraud. One of the factors is pressure. The tendency of accounting fraud, meaning that the pressure referred to is in the form of financial better the morale of an employee, the employees pressure as well as necessity factors. Negative work tend not to commit fraud on financial statement. motivation encourages someone to commit The number of cases of accounting fraud that cheating. occurs shows that accounting fraud is still high, not The occurrence of a number of frauds in the only in business entities but also in central and local government environment is a reflection of the regional governments and the type of fraud that low morale of employees in the financial or non- occurs in government entities is corruption. financial departments of local government Aru Islands Regency, which is an institutions. The low moral results in a person tends autonomous region that was expanded based on law to be more concerned with their own interests than number 40 of 2003. Although it is a new the interests of the organization, resulting in fraud. autonomous region, the regional head has been hit This can be seen in the corruption case of APBD by a corruption case. Based on data from detik.com funds committed by the leading district head. Moral news there are some cases of corruption in the Aru decadence and a weak understanding of religion are Islands Regional Government as an example during factors causing fraud and this will reduce the government first district, corruption fund budget government fraud prevention efforts. 2006-2007. In this case, the regent guilty of misusing his authority among others use the money LITERATURE REVIEW for estab paid mes jargaria, personal loans and to Fraud Pentagon Theory pay related fee attorney to suit the administrative According to Donald Cressey, three general court (Source: https://news.detik.com , accesed on characteristics that explain why someone commits 20 October 2019). cheating, namely pressure, opportunity and Another phenomenon can be seen in the cse found rationalization. Then Crow’s developing the fraud by the Supreme Audit Agency (BPK) in the 2018 model into five elements, namely pressure, budget realization report of the Aru Islands opportunity, rationalization, competence and Regency Regional Government which stated that arrogance which was later called the fraud pentagon the results of the examination of the School theory. Operation Assitance Fund (BOK) Expenditure a. Pressure contained an amount that could not be believed to Pressure is the incentive for people to be fair, amounting to IDR 9,516. 420. 099.00 which commit fraud. Pressures that arise not only 84 Borolla, Luciana., Anakotta, Fanny., Monika., Batkunde, Adonia., Anita./JoEBGC Vol. 4 No. 1 (2021) 83 - 87

becauase of need or financial problems, but METHOD also because of greed. b. Opportunity This research is a Quantitative using primary Opportunity is an opportunity that allows data. fraud to occur. Opportunities can occur The population of this study were all Regional because of weak internal control, poor Apparaturs Organizations in the Regional management oversight or through the use of Government of Aru Island Regency. The sample of positions. this study is employees who work in the financial c. Rasionalization department of all regional apparaturs organizations Rationalization is an important element in in the Aru Islands Regency Government. The the occurrence of fraud, where fraud sampling technique used was purposed sampling. perpretrators always seek rational justifications to justify their actions. RESULT AND DISCUSSION d. Competence Crowe defines competene as an employee’s The Effect of Compliance With Accounting ability to override internal control, develop Rules on the Tendency of Accounting Fraud concealment strategies and control social The statistical test on the hypothesis (H1) situations for personal gain. shows that the obedience of accounting rules has a e. Arrogance significant negative effect on the tendency of Acccording to Crowe, arrogance or lack of accounting fraud. In relation to the phenomena and conscience is an attitude of superiority and test results in this study, the level of obedience to rights or greed of people who believe that accounting rules within the scope of local internal control is not personally applied. government is still low so that behavior tends to commit or cheat sttil occurs. The low obedience to Compliance With Accounting Rules accounting rules, one of which is triggered by the The rules are a predetermined way to be low understanding of human resources in obeyed. Accounting standards are made in such a interpreting accounting rules, so that when audited way as the basis for preparing financial statements. this understanding may differ from the Failure in preparing financial statements due to understanding by the BPK. To minimize the non-compliance with accounting rules will result in occurrence of accounting fraud within the entity, fraud that cannot be detected by the auditors. there must be binding rules so as to encourage employees to work prudently and not deviate. Employee Motivation According to Softian, 2017, the factors that cause cheating are the motivation, namely the The Effect of Employee Motivation on the pressure in a person to fulfill his finances and Tendency of Accounting Fraud always imagine living in luxury. Everyone has a The statistical test on the hypothesis (H2) material need that can drive cheating. To meet these shows that employee motivation does not have a needs people will do anything as long as their needs significant effect on the tendency of accounting are met even by cheating. fraud. Related to the phenomena and test result in this study, a person’s work motivation, good or bad Management Morality has no effect on the occurrence of accounting Management morality is management’s tendencies. This phenomenon describes the action to do the right thing and has nothing to do existence of negative motivation so that someone is with profits and values. The higher the level of motivated to cheat. Furthermore, even if the management morality, the more management pays organizational culture and leadership style are attention to broader and universal interests rather good, it will not influence someone not to cheat. than personal interests. The Effect of Management Morality on the Tendency of Accounting Fraud Statistical testing on the hypothesis (H3) shows that management morality has a significant 85 Borolla, Luciana., Anakotta, Fanny., Monika., Batkunde, Adonia., Anita./JoEBGC Vol. 4 No. 1 (2021) 83 - 87

and significant effect on the tendency of accounting Fraud Against Unethical Behavior”. WRA, fraud. Related to the phenomena and test result in Vol: 1, No. October 2nd, 2013. this study, it shows that there is low morale so that Arens, A. Alvin. Ellder. J. Ronald Beasley Mark management is able to cheat. In other words, the S. (2008). Auditing and Assurence Services lower a person’s level of moral reasoning, the Integrated Approch. Jakarta: Erlangga. moral likely he is to commit fraud. The occurrence BPK Representative of Maluku Province 2018. of a number of frauds within the local government Report on the Results of Examination on the is a reflection of the low morale that employees in Financial Report of the Regional the financial or non-financial departments of local Government of Aru Isnalnds Regency for government institutions have. the 2018 fiscal year. Chui, Lawrence and Byron, Pike. 2013. “Auditors responsibility for fraud detection; New wine in old bottles?” Jurnal of CONCLUSION Forensic & Investigative Accounting Vol 5, Issue 1, Januari-June. Minnesota: University Based on the data that has been collected of St. Thomas. UST Research online. and processed in order to obtain the results of Delfi, Tiara, Rita Anugerah, Al Azhar, A and testing carried out on the problem using multiple Desmiyawati, 2014. “The Effect of Internal regression models, it can be concluded that: Control Effectiviness and Conmpensation 1. Compliance to accounting rules has a Against the Tendency off Accounting Fraud significant effect on the tendency of (Survey at BUMN Branch Pekanbaru)”. accounting fraud and hypothesis one (H1). SNA 17 Mataram, Lombok. Mataram 2. Employee motivation has no significant University. effect on the tendency of accounting fraud www.multiparadigma.lecture.ub.ac.id and rejects hypothesis two (H2). Fauwzi, Mohammad, Glifandi, Hari.2011. 3. Management morality has a significant “Analysis of the Effect of Internal Control effect on the tendency of accounting fraud Effectiviness, Perceptions of Compensation and accepts hypothesis three (H3). Suitability, Management Morality on Unethical Behavior and Tendencies of Suggestions to the next researcher are: Accounting Fraud” (Thesis). Semarang. 1. Further research is expected to increase the Diponegoro University. number of respondents so that the research Fardinal, 2013. “The Quality of Accounting results can be concluded in general. Information and The Accounting 2. Future research is expected to use research Information System Through the Internal methods such as direct interviews so that Control System: A Study on the Ministry researchers can ensure that the respondent and State Agencies of the Republic understands the meaning of each question Indonesia”. Research Jurnal of Finance and item posed in the questionnaire so that Accounting ISSN Vol. 4, No. 6. Bandung: results of the data obtained by the researcher Padjajaran University. www.iiste.org are not biased and in accordance with what Gaviria, A. 2011. “Assesing the Effect of is expected and intended by the researcher. Corruption and Crime on Firm Performance”. Working Paper. Download from the Social Science Research Network. Giarini, Frisaha Lorista. 2015. “The Effect of Onternal Control Effectivinesss, Compensation Siutability and Information Asymmetry on the Tendency of Accounting REFERENCES Fraud (Empirically Study at the Adelin, Vani and Eka, Fauzihardani. 2013. “The Muhammadiyah University of Surakarta)”. Effect of Internal Control, Adherence to (publication manuscript). Surakarta: Accounting Rules and the Tendency of Muhammadiyah University of Surakarta.

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