International Journal of Education. Social Studies. And Management (IJESSM) e-ISSN : 2775-4154 Volume 5. Issue 1. February 2025 The International Journal of Education. Social Studies, and Management (IJESSM) is published 3 times a year (February. Juny. Novembe. Focus : Education. Social. Economy. Management, and Culture. LINK : http://lpipublishing. com/index. php/ijessm Determinants of Integrity of Financial Reports in State-Owned Companies Erli Yulisa1. Khairudin2 1,2 Universitas Bandar Lampung. Indonesia ARTICLE INFO Article history: Received 10 Janhuary 2025 Revised 25 February 2025 Accepted 12 March 2025 Keywords Corresponding Author : ABSTRACT Financial reports must have high integrity, which means they must be based on honest and impartial moral principles. This study aims to test and analyze the effect of auditor independence, financial distress, institutional ownership and independent commissioners on the integrity of financial reports in state-owned companies listed on the IDX in 2021-2023. The final sample of this study was 34 samples. The test was carried out using multiple linear regression analysis, where the integrity of financial reports was measured using accounting The results of this study are that auditor independence, institutional ownership and independent commissioners have an influence positive and significant impact on the integrity of financial Financial distress has an influence negative and significant impact on the integrity of financial reports. Integrity Financial Statements. Auditor Independence. Financial Distress. Institutional Ownership. Independent Commissioners. 21021041@student. INTRODUCTION The company is closely related to financial reports, one of its tasks is to submit the report where the company's financial condition during a certain period that will be presented in the financial report must have different results for each period. Financial reports are a structured presentation of the financial position and financial performance of an entity (Indonesian Institute of Accountants, 2. Financial reports must have high integrity based on honest and impartial morals . (Suroya et al. , 2. Reports that present the company's economic conditions that are true, accurate, and unaltered mean they have high integrity (Ayem, 2. Integrity in financial reports is the extent to which the report shows information honestly and correctly. Information that has high integrity can make people rely on this information (Reschiwati, 2. International Financial Reporting (IFRS) states that integrity is a faithful The integrity of financial reports is used as a means of decision making (Atiningsih, 2018. Wijaya, 2. Evaluating the accuracy and International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 consistency of financial reports against the original conditions of the company (Nurbaiti, 2. Improving the quality of financial reports, accuracy. Increasing public trust (Tussiana et al . , 2. Maintaining and improving the resulting financial reports (Ayu et al. , 2. However, in fact, there are still many companies that have not presented their financial reports honestly, such as the financial scandal revealed by https://w. com involving PT Indofarma Tbk (INAF) and its subsidiaries, this case emerged after the Investigative Audit Result Report (LHP) to the Audit Board of Indonesia (BPK) on the financial management of PT Indofarma Tbk and its subsidiaries which was submitted to the Attorney General of the Republic of Indonesia on May 20, 2024. This report indicates a state loss of IDR 371. 8 billion . Where in 2020 Indofarma's net profit attributable to the parent entity was IDR 27. 58 million . This figure decreased by 99. 65% or almost 100% from the 2019 period of IDR 7. 96 billion, but with this loss the audit results were still declared reasonable. In 2021. Indofarma recorded a loss attributable to the owners of the parent entity of IDR 37. 58 billion . In 2022. INAF still suffered a loss of IDR 428 billion, this loss increased drastically by 1,056%. Until the first semester of 2023. Indofarma posted a loss attributable to the owners of the parent entity of IDR 120. 34 billion, for the financial report for the first semester of 2023 it was found that this report was not audited on the IDX website. Indofarma's financial problems were triggered by its subsidiary. PT Indofarma Global Medika (IGM), which did not deposit revenue of IDR 470 billion from the sale of its products, which resulted in Indofarma having difficulty paying employee salaries. The case at PT Indofarma Tbk (INAF) provides a real picture of the importance of integrity, transparency, and effective supervision in managing corporate finances. Several studies have been conducted previously regarding auditor independence regarding the integrity of financial reports with different results, including the results of research from(Hermie, 2024. Permana, 2. states that auditor independence has a significant effect on the integrity of financial The study concluded (Rahmaputri, 2. that there is no effect between auditor independence and the integrity of financial statements. This study indicates that the duration of the working relationship between the auditor and the client has a negative correlation with the quality of financial The results of research on financial distress with the integrity of financial statements are still inconsistent where research (Anastasya et al. , 2023. Fairuzzaman, 2024. Wulandari et al. , 2. shows a significant negative relationship, while research (Talu, 2. shows no influence. Research related to institutional ownership on the integrity of financial statements studied by International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 (Angel et al . , 2023. Suroya et al. , 2. has a significant influence. Other research on institutional ownership with the integrity of financial statements conducted by (Ayunani et al. , 2. which states that there is no influence, because institutional ownership is not directly involved in managerial decision making or corporate governance and has an impact on the lack of influence given by institutional ownership on company performance. Several studies on independent commissioners and the integrity of financial statements conducted by (Sucitra, 2020. Suroya et al. , 2. showed that the existence of independent commissioners in the integrity of financial statements has a significant However, other studies such as those conducted by (Bahdi et al. concluded that independent commissioners have no effect in improving the integrity of financial reports. The reason is because companies only appoint independent commissioners to meet legal requirements, not because they want to improve the quality of financial reports . The novelty of this research lies in the research object and research Where some previous studies, namely(Suroya et al. , 2. using the research object of chemical sector companies listed on the IDX in 2018-2022. (Hermie, 2. using the research object of mining companies. (Rahmaputri, 2. conducting research in the property and real estate sector listed on the IDX (Sucitra, 2. examines the banking sub-sector on the Indonesia Stock Exchange for the 2015-2018 period. (Suroya et al. , 2024. using the object of manufacturing companies listed on the Indonesia Stock Exchange in 20182020, while in this study examines state-owned companies listed on the Indonesia Stock Exchange for the 2021-2023 period. The background of taking the object of state-owned companies is the case of financial report manipulation such as that which occurred in the company Indofarma Tbk and state-owned companies play an important role in the Indonesian economy in providing jobs and contributing to state revenues, with this study it is hoped that it can provide insight into the extent to which the performance of state-owned companies has an impact on the country. Independent variables studied(Suroya et al. , 2. namely institutional ownership, audit committee and independent commissioner only. This study adds auditor independence and financial distress The reason for adding variables is because there has been no research that combines all the variables that I studied and also the inconsistency of previous research, where the auditor's opinion can influence public investment decisions, trust in the quality of the auditor is very important to build public trust and ensure that the public trusts the audit results. This financial distress can affect the integrity of financial reports which encourages management to change financial reports because companies will try to maintain financial International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 performance in order to meet market expectations when they face financial problems that make them unable to pay their obligations. This research is important to be conducted to test the influence of independent variables on dependent variables, namely independence. financial distress , institutional ownership and independent commissioners towards integrity report financial statements of state-owned companies listed on the Indonesia Stock Exchange (IDX) for the 2021-2023 period. This study is expected to provide insight into how these factors contribute to improving the quality and reliability of financial reports, so that financial reports can be used for appropriate decision making by stakeholders and increase public trust in the company's financial reports. RESEARCH METHOD This research is a quantitative research using secondary data . The sample of this research is state-owned companies listed on the Indonesia Stock Exchange for the period 2021-2023. The selection of state-owned companies as research objects is due to cases of financial report manipulation such as that which occurred at PT Indofarma Tbk and state-owned companies play an important role in the Indonesian economy in providing jobs and contributing to state revenues so that it is expected to provide an overview of the performance of state-owned companies so far. The source of secondary data in this study was obtained from w. id or the website of each company on year 20212023. The sampling technique in this study used purposive sampling with the following criteria: . ) State-owned companies listed on the Indonesia Stock Exchange (IDX) for the 2021-2023 period, . State-owned companies that publish financial reports using the rupiah currency, . State-owned companies that have complete data related to the required variables. Based on data obtained from the Indonesia Stock Exchange (IDX) on state-owned companies during the 2021-2023 period, there were 26 companies. Then after the selection process based on the criteria, there were 18 companies for 3 years that met the The dependent variable in this study is the integrity of financial reports, the measurement of which uses the Givolyn and Hayn Model . namely using the Conservatism Based On Accured Items formula . Table 1. Measurement of Variables International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 Research Integrity of Financial Reporting Auditor Independen Financial Distress Understanding Financial reporting integrity is defined as the disclosure and presentation of all accounting data in a fair, unbiased manner so that it shows the condition of the Auditor independence is an auditor who is independent and not supervised by another party. Financial distress is a situation in which a company difficulties as a result of its failure to meet its How to Measure Scale Variables yaycCycAyayaya (NIO DEP Oe CFO) y (Oe. CONACC is Earnings conservatism based on accrued items . NIO is Operating Ratio current year . DEP is Depreciation of current CFO is Net amount of cash flow from operating activities of current year . TA is Total assets of current. Dummy variable : score 1 for companies auditor services for 3 years. Nomina while score 0 for companies that use the same auditor services for 3 years . G = 1. 650X1 3. 404X30. 016ROA 0. Where X1 is Working Capital / total assets. X3 is EBIT / total assets ROA is net income / total assets . Grover cut-off number of G-model : if G Ou 0. 01 means safe zone while the value of G O - 0. 02 enters the Financial distress zone. Ratio Source (Azizah et al. May. Rivandi et al. , 2022. Talu, 2023. Wulandari et , 2. (Permana. Pohan et Reschiwa Siahaan et al. (Talu, 2023. Wulandari S , 2. International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 Institutional Ownership Independen Commission The level of ownership is the ownership held by companies, and as insurance, banking, and pension funding are referred to as An independent commissioner is a member of the board of who is independent from management and kepemilikan institusional ycycycoycoycaEa ycycaEaycayco ycnycuycycycnycycycycn Ratio ycycuycycayco ycycaEaycayco komisaris independen ycycycoycoycaEa ycoycuycoycnycycaycycnyc ycnycuyccyceycyyceycuyccyceycu Ratio ycycuycycayco yccyceycycaycu ycoycuycoycnycycaycycnyc (Ayunani. Rivandi et al. , 2022. Suroya ,2024. Tamara et al. (Pratika, 2020. Sucitra, 2020. Suroya et al. The tests conducted in this study were descriptive statistics, classical assumption tests, hypothesis tests, and multiple linear regression. The classical assumption tests include . Normality Test, . Multicollinearity Test, . ) Autocorrelation Test, . Heteroscedasticity Test. Hypothesis Tests, namely . F Test, . T Test, . Determination Coefficient Test. The multiple linear regression model is as follows: yayaya = yca yca1yaya yca2ya yca3yaya yca4yaycAya yce Where Y is the symbol of financial statement integrity. a is the symbol of 1IA is the symbol of auditor independence regression coefficient. 2G is the symbol of Financial distress regression coefficient . 3KI is the symbol of institutional ownership regression coefficient. 4KMI is the symbol of independent commissioner regression coefficient. e is the standard error. International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 RESULT AND DISCUSSION Descriptive Statistical Test Table 2. Descriptive Statistics Variables Min Max Mean Std. Deviation Integrity Financial 34 Reports Auditor Independence Financial Distress Institutional Ownership Independent Commissioner Source: Processed Data, 2024 Each variable used in this study is described through descriptive statistical The data viewed are the number of data, minimum value, maximum value, average value, and standard deviation (Ainiyah et al. , 2. The final sample of this study amounted to 34 samples. From the findings of descriptive statistical testing, the maximum value for financial statement integrity, which is 10, is found in the company Waskita Beton Precast Tbk, indicating that the company has the highest level of integrity among the companies studied. This indicates that the company's financial statements tend to be more accurate, honest, and relevant than other companies. The minimum value for financial statement integrity, which is -0. 07, is found in the company Bank Mandiri (Perser. Tbk, indicating that this company has the lowest level of financial statement integrity among the companies studied. This indicates potential problems or irregularities in the company's financial statements, such as manipulation of figures or non-compliance with accounting standards. average, the financial statement integrity value of 0. 0066 indicates that overall, the level of financial statement integrity of all companies studied tends to be close to neutral. This means that there is no significant tendency whether most companies have high or low financial statement integrity. The standard deviation value of 0. 03573 indicates the level of variation or spread of financial statement integrity data. The greater the standard deviation value, the greater the difference in integrity levels between one company and another. In this case, the mean value is smaller than the standard deviation indicating that the level of financial statement integrity of the companies studied tends to be relatively heterogeneous or varied. Auditor independence has a value ranging from 0. 00 to 1. This means that the level of auditor independence is not uniform and there are significant differences between auditors, factors such as experience, size of public International Journal of Education. Social Studies. And Management (IJESSM) Volume 5. Issue 1. February 2025 Page 522-538 accounting firm , type of client, and pressure from management can be some factors that influence these variations. A minimum value of 0. 00 identifies that the company uses the services of an auditor for 3 consecutive years where independence provides a biased or non-objective audit opinion, which can reduce the quality of information presented in the financial statements. maximum value of 1. 00 identifies a company that always uses a different auditor in examining financial statements in 3 consecutive years which has the potential to provide an objective audit opinion, so that it can improve the quality of information presented in the financial statements. The average auditor independence is 0. 6176 identifying that around 61. 76% of state-owned companies in the sample use the services of the same auditor for 3 consecutive The remaining 38. 24 % use different auditors. The standard deviation value is 0. 49327 < from the Mean value of 0. This shows that there is a fairly low or homogeneous variation. Financial distress has a minimum value of -2. 20 in the company Waskita Beton Precast Tbk in 2021. This shows that the company is in a state of significant financial difficulty, which is indicated by insufficient current assets to pay debts. A large negative value indicates a high risk of bankruptcy. The maximum Financial distress value of 1. 57 was found in Bank Rakyat Indonesia (Perser. A positive value indicates that the company has a better ability to meet its financial obligations. The average Financial distress is 0. which indicates that in general, the financial condition of the companies in the sample tends towards financial distress. Although not all companies are in very bad condition, the average shows that there is financial pressure in most The standard deviation value of 0. 67388 is > from the Mean value of This shows that there is a fairly large variation, meaning that there is a significant difference between the financial condition of one company and Some companies may be in very good condition, while others are in very bad condition. Institutional ownership has a minimum value ranging from 0. 00 in Bank Mandiri (Perser. Tbk in 2021, this indicates that the company has no shares owned by institutions at all. This could be because the company is still new. The maximum institutional ownership value of 0. 98 is in Bank Rakyat Indonesia (Perser. in 2022, this indicates that almost all of its shares are owned by The average institutional ownership is 0. 5107 , this indicates that in general, about half of the company's shares in the sample are owned by This indicates a significant role for institutions in the company's ownership structure. The standard deviation value is 0. 29401