Governance Gaps and Audit Quality in High Valuation Start-Up (Case Analysis of Alleged Efishery Financial Report Manipulation)

Abstract

Governance gaps in high-value startups often stem from an imbalance between business growth ambitions and the integrity of internal oversight. This study analyzes the impact of governance gaps on fraud risk through the mediating role of audit quality, using a case study of alleged financial statement manipulation at eFishery during the 2024–2025 period. Using a quantitative PLS-SEM approach based on SmartPLS on data from 114 auditor respondents in Indonesia, the results show that governance gaps do not have a significant direct effect on fraud risk, but do have a significant positive effect on audit quality. Audit quality fully mediates this relationship. These findings underscore the critical role of auditor independence and skepticism as the last line of defense. Implications: Regulators and management need to strengthen audit quality alongside governance reforms to ensure ethical business sustainability.