Organizational Ethics Failures in the Financial Reporting of PT Indofarma Tbk.
Abstract
This study analyzes ethical failures behind financial reporting irregularities at PT Indofarma Tbk using Moral Disengagement, Ethical Infrastructure, and Tone at the Top perspectives. Employing a qualitative descriptive case study, it examines secondary data from the 2024 BPK RI investigative audit, national news, and 2021–2023 annual reports. Findings show that moral disengagement enabled individuals to justify improper revenue recognition, inflated inventories, and misappropriation of funds. Organizational weaknesses such as poor documentation, noncompliance with procurement procedures, ineffective internal controls, and delayed corrective actions created structural gaps that allowed repeated reporting deviations. Furthermore, a weak tone at the top contributed significantly, as leadership failed to enforce ethical standards, ensure governance discipline, and maintain transparency. The interaction of individual, structural, and leadership failures fostered sustained financial manipulation, leading to significant financial deterioration and capital deficiency. This study highlights importance of strengthening ethical governance in state-owned enterprises, especially in regulated sectors like pharmaceuticals.
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DOI: https://doi.org/10.17509/jrak.v14i1.93441
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