THE RELATIONSHIP OF INDIVIDUAL MORALITY AND AUDITOR PERCEPTIONS OF FRAUD TENDENCY: TESTING OF THE FRAUD PENTAGON THEORY APPROACH

This study aims to examine the tendency of fraud to the perception of external auditors triggered by the five components of pentagon fraud: pressure, opportunity, arrogance, rationalization,and competence. In addition, the morality of the individual is placed as an intervention variable for this relationship. This is a quantitative study with a survey of external auditors at the BPK in Jakarta. The intervention model for the research framework was developed to investigate the role of individual morality interference. The findings suggest that the five components of the pentagons fraud theory are not fully proven to be fraud triggers in the perception of external auditors. Arrogance, rationalization, and competence have proven to have a positive effect on the perception of fraud tendencies, while pressure and opportunity have a negative impact on the perception of fraud tendencies. Then pressure, rationalization, and competence are shown to negatively impact individual morality, while opportunity and arrogance positively impact individual morality. In addition, 5 (five) variables in fraud pentagon theory, namely pressure, opportunity, arrogance, rationalization, and competence, are proven to prevent the perception of fraud tendency. This can be explained because this study is the first study to examine pentagon fraud in the context of behavior in the environment of government external auditors, so the results cannot be compared with previous studies that used proxies in financial statements as predictors of fraud.