ABSTRACT
This study aimed to detect fraudulent financial reporting using diamond fraud analysis. This rationalization was proxied by an audit and the capability to replace directors suspected of making fraudulent financial statements. The sample comprised 10 pharmaceutical and chemical sub-manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2012 to 2017. This research was conducted using multiple linear regression analysis. The results showed that external pressure variables measured by leverage ratios influence fraudulent financial reporting. Financial stability and change in terms of value, along with how a change of directors affects fraudulent financial statements, were also examined.
