International Journal of Multidisciplinary Research and Publications ISSN (Online): 2581-6187 236 Syaiful Misbah Srihatno Putro and Dewita Puspawati, “Analysis of Fraud Financial Statement with Fraud Hexagon and Financial Distress,” International Journal of Multidisciplinary Research and Publications (IJMRAP), Volume 5, Issue 12, pp. 236-243, 2023. Analysis of Fraud Financial Statement with Fraud Hexagon and Financial Distress Syaiful Misbah Srihatno Putro 1 , Dewita Puspawati 2 1 Faculty of Economic and Business, Universitas Muhammadiyah Surakarta, Surakarta, Indonesia 2 Faculty of Economic and Business, Universitas Muhammadiyah Surakarta, Surakarta, Indonesia Email address: syaifulmisbah31@gmail.com, dp123@ums.ac.id Abstract— This study aims to detect the effect of fraud hexagon model and financial distress on fraud financial statements. The population in this study are banking companies registered on the IDX during 2020-2021 with a total sample is 72 data. Sampling determined using the purposive sampling method. The analysis technique used Logistic Regression Analysis. The results of this study indicate financial stability, external pressure, personal financial need, change of director, change of auditor, effective monitoring, arrogance, and collusion have no effect on fraud financial statements. Then, the nature of the industry and financial distress have an effect on fraud financial statements. Keywords— Fraud financial statement, fraud hexagon, financial distress. I. INTRODUCTION Financial reports are records of financial information that can provide information related to company performance descriptions, company profiles, and are useful for some users of financial reports in making decisions (Bawekes 2018). Financial reports are a means of management accountability to all stakeholders for the company's performance during a certain period, so management as the preparation of financial reports tries to present financial reports as attractive as possible to the wishes of its users (Sukmadilaga 2022). Financial reports should be prepared and presented honestly and transparently in accordance with the Financial Accounting Standards guidelines set by the Indonesian Accounting Association. Fraud financial statement is defined as an intentional or unintentional act or action, which causes the financial statements to be materially misleading. According to the Association of Certified Fraud Examiners (ACFE, 2018) in its report that acts of fraud experience growth over time which begins with someone's bad intention to act intentionally to commit crimes that cause shocks in the economy. The company pays close attention that this is not a trivial matter that is easy to handle, because criminals must have many strategies that lead to fraud in order to keep losses to a minimum with internal controls running within the company (Sari & Nugroho, 2020). Examples of fraud cases in Indonesia, 2019, PT. Garuda Indonesia was caught in a case of fraudulent financial reporting which eventually received sanctions from the Financial Services Authority (OJK). In the 2018 financial report, Garuda Indonesia managed to record a net profit of US $ 809 thousand. This value is controversial because in 2017 Garuda Indonesia recorded a loss of US $ 216.58 million. This performance was quite surprising because in the third quarter of 2018 Garuda Indonesia still lost US$114.08 million (CNN Indonesia, 2019). The nature of this problem stems from a cooperation agreement between Garuda Indonesia and PT. Mahata Aero Teknologi worth US$239.94 million, of which the funds are still receivable but have been recognized by Garuda Indonesia's management as revenue. This acknowledgment is deemed not in accordance with the rules of Statement of Financial Accounting Standards (PSAK) number 23. The market responded to the chaos in Garuda Indonesia's financial report, causing the company's shares to drop 4.4 percent. Garuda Indonesia's shares fell to a level of IDR 478 per share from the previous IDR 500 per share (CNN Indonesia, 2019). Fraud Financial statement can’t be considered trivial, it has been proven that this fraud can occur every year and cause substantial losses (Harto, 2016). It doesn't stop there that the impact of this fraud can reduce the company value and public trust. The role of the auditor is needed to detect this fraud as early as possible, as an effort to minimize and even prevent prolonged problems that can harm the company. The rise of cases of fraud financial statements in Indonesia, especially in the financial and banking sectors, which tend to be quite difficult to disclose. this prompted the researcher to conduct this research. In the research conducted, researchers applied the fraud hexagon model and financial distress. This is done because the theory is the latest theory and is a refinement of several previous theories. II. LITERATURE REVIEW & HYPOTESIS Agency theory Jensen and Meckling (1976) introduced a theory is agency theory, where an agency relationship arises when there is cooperation between the agent and the principal, where management as an agent is employed and given responsibility by the shareholder as the principal in terms of decision making. This bond requires management to be accountable for the work and tasks that have been given by the shareholder. However, problems often occur in the relationship between agents and principals due to differences in interests which are called conflicts of interest (Jensen & Meckling, 1976). Fraud Financial Statement Fraud financial statement is a misrepresentation of a company's financial performance that is intentionally made to