Examining the role of sharia supervisory board attributes in reducing financial statement fraud by Islamic banks

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Sharia Supervisory Board (SSB) plays an important role in implementing Islamic law in Islamic banks, including fraud prevention. This ungodly act, also known as haram, is highly forbidden in Islam, as evidenced in the holy book of Al Qur’an. Therefore, this study was conducted to provide evidence on the role of SSB attributes (number of members, expertise, cross-membership, educational level, attendance of meeting, tenure) in preventing fraud. This study used 11 Islamic banks in Indonesia as research samples that were observed during 2014–2018. Data were analyzed using the ordinary least squares (OLS) method. The research findings from this study showed that the number of members, cross-membership, education level, attendance of meetings, and SSB tenure were not proven to reduce fraud. SSB’s expertise in accounting/finance had a negative influence on financial statement fraud. The implication of the study is that SSB’s expertise helps banks to effectively carry out their duties, namely detecting financial statement fraud. SSB acts as an independent control mechanism that states that all bank activities are in line with Islamic law and also avoid financial statement fraud.

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    • Table 1. Descriptive analysis
    • Table 2. Variables causality test
    • Table 3. Ordinary least square test
    • Conceptualization
      Indah Anisykurlillah, Prabowo Yudo Jayanto, Hasan Mukhibad
    • Data curation
      Indah Anisykurlillah, Prabowo Yudo Jayanto, Hasan Mukhibad, Umi Widyastuti
    • Formal Analysis
      Indah Anisykurlillah, Prabowo Yudo Jayanto, Hasan Mukhibad
    • Funding acquisition
      Indah Anisykurlillah, Prabowo Yudo Jayanto
    • Investigation
      Indah Anisykurlillah, Prabowo Yudo Jayanto
    • Methodology
      Indah Anisykurlillah, Prabowo Yudo Jayanto, Hasan Mukhibad
    • Project administration
      Indah Anisykurlillah
    • Resources
      Indah Anisykurlillah, Prabowo Yudo Jayanto
    • Software
      Indah Anisykurlillah, Hasan Mukhibad, Umi Widyastuti
    • Supervision
      Indah Anisykurlillah, Prabowo Yudo Jayanto
    • Validation
      Indah Anisykurlillah, Hasan Mukhibad, Umi Widyastuti
    • Visualization
      Indah Anisykurlillah, Prabowo Yudo Jayanto, Umi Widyastuti
    • Writing – original draft
      Indah Anisykurlillah, Prabowo Yudo Jayanto, Hasan Mukhibad
    • Writing – review & editing
      Indah Anisykurlillah, Umi Widyastuti