Factors Affecting Disclosure of Fraud in Islamic Commercial Banks in Indonesia 2014-2018

Acts of fraud that occurred in several Islamic banks for sometimes are a proof that there is no guarantee of any institution that can be free from fraud cases. As an effort to reduce the level of fraud that occurs in Islamic banks, it is necessary to implement good corporate governance, good supervision, and implementation of an anti-fraud system that can be realized through the application of a whistleblowing system. This study aims to analyze the factors that influence fraud disclosure at Islamic Commercial Banks in Indonesia in 2014-2018. The objects of this research are seven Islamic Commercial Banks (BUS) registered with the Financial Services Authority (OJK) from the 2014-2018 period. The independent variables used in this study are Good Corporate Governance, whistleblowing system, and effective monitoring as measured by the ratio between the number of Independent Commissioners and the total number of Commissioners. The analysis method used in this research is panel data regression. The results of this study indicate that the independent variable application of the whistleblowing system and the value of Good Corporate Governance self-assessment has a positive effect on the disclosure of fraud in Islamic Commercial Banks, while the independent variable ineffective monitoring does not affect on the disclosure of fraud. This study has various limitations, one of which is limited data since it only focuses on Islamic commercial banks. The suggestions from this study are Islamic banks in Indonesia need to implement a whistleblowing system as an effort to prevent fraud, this is evidenced by the whistleblowing system variable influencing the disclosure of fraud in Islamic banks and it must improve the implementation of corporate governance to make it better. It can be seen from the composite value of the self-assessment results of the GCG BUS implementation. There are still many composite scores of 3 (quite good), even though the GCG variable has a positive and significant effect on fraud disclosure.