The Impact of the Bystander Effect and Whistleblowing on Financial Reporting Integrity: A Case Study of PT. Budi Andalan Argo Employees
Keywords:
bystander effect, whistleblowing, financial statements fraudAbstract
Financial statement fraud is a widespread problem in the current corporate environment. This study aims to investigate three key factors: firstly, the correlation between the bystander effect and fraudulent financial statements; secondly, the influence of whistleblowing on fraudulent activities; and thirdly, the combined impact of both the bystander effect and whistleblowing on the prevalence of fraudulent financial statements. The study utilises a quantitative research methodology and specifically examines the employees of PT. Budi Andalan Argo. The research was conducted using a purposive selection technique, which specifically focused on selecting permanent employees from the accounting, auditing, and cashier sectors. This resulted in a sample size of 34 employees. The study thoroughly examined the collected data using the multiple linear regression analysis method and SPSS version 17 software. The studies unveiled numerous crucial insights. The bystander effect exhibited a noteworthy favourable association with deceptive financial statements, suggesting that the existence of passive onlookers enhances the probability of financial wrongdoing. On the other hand, there is a clear and significant inverse correlation between whistleblowing and fake financial statements. This indicates that when wrongdoing is actively reported, it serves as a strong deterrent against engaging in fraudulent practices. Furthermore, when examining both components concurrently, their collective effect was discovered to have a considerable influence on the occurrence of deceptive financial statements, emphasising the complex interplay between passive observation and active involvement in organisational contexts. To summarise, this study highlights the significance of tackling both the bystander effect and whistleblowing in reducing financial statement fraud. Organisations can effectively resist fraudulent actions by comprehending these dynamics and applying tactics that foster accountability and ethical behaviour.
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