Financial distress, earning management, financial statement fraud and audit quality as a moderating variable: listed companies on the Indonesia Stock Exchange [version 1; peer review: 1 approved with reservations]

Background: Accounting practices, profit bubbles, information manipulation and deception, and earning management are all examples of fraudulent financial statement cases. Companies create fraudulent financial statements for a variety of reasons, including financial challenges and debt payment delays. Financial fraud is created by five factors: pressure, opportunity, rationalization, capability, and arrogance. Methods: The purpose of this study is to see whether audit quality (AQ) has a moderating effect on the relationship between financial distress (FD) and earning management (EM) to financial statement fraud (FSF) in infrastructure, utility, and transportation companies listed on the Indonesia Stock Exchange during the years 2015 to 2019. The data sources are the www.idx.go.id and the company's annual reports. Purposive sampling was used to collect data from thirty companies over the course of five years, totaling 150 observations. Moderating regression analysis (MRA) was used in data analysis. Result and conclusions: The hypothesis testing revealed that FD and EM have a significant impact on FSF. AQ is able to moderate the relationship between FD to FSF but unable to moderate the relationship between EM to FSF.