Financial Statement Fraud Detection using Analysis of Corporate Social Responsibility Disclosure and Annual Report Readability with Earnings Management as Moderating Variable

According to historical data, financial statement fraud considered as the type fraud scheme that causes the most losses compared to the other schemes. Fraud theories has been introduced and used to examine factors in detecting financial statement fraud. However, studies that analyze the influence of corporate ethical culture in relation to fraudulent financial statements are still very limited. Thus, the purpose of this research is to analyze the influence of corporate social responsibility disclosure and annual report readability which reflects the company's ethics in disclosing its performance in detecting fraudulent financial statements while assessing the effect of earnings management as the moderating variable. Sources of data used in this study are secondary data that obtained from the Indonesia Stock Exchange website. The population of this research were food and beverages manufacturing companies listed on Indonesia Stock Exchange for the period 2017-2019 since the most common financial statement fraud schemes appear in the manufacturing industry and the food and beverages subsector are the largest among the other. Our research is quantitative study. Using the purposive sampling technique, researchers found 19 companies that fulfill the criteria. Within 3 years of observation, the total number of samples was 57. Multiple linear regression and moderated regression analysis are used to analyze data. The research results indicated that annual report readability with a moderating effect of earnings management has an influence in detecting financial statement fraud. Meanwhile annual report readability without moderation effect of earnings management and corporate social responsibility disclosure with or without moderating effect of earnings management, has no influence in detecting financial statement on listed food and beverages manufacturing companies.