Some cases both nationally and Internationally indicate the occurrence of irregularities in financial reporting due to the weakness of the company's internal control system, and the audit committee that has not functioned optimally, so that the resulting of the financial reporting is in low quality. This study used explanatory method. The data were collected through survey by distributing questionnaires to State Owned Enterprises (SOEs) in Indonesia. The respondents involve audit committee, internal auditors and financial directors. The data have been analyzed by using partial least square analysis modeling to test the hypotheses. The results concluded that, the quality of the audit committee and objectivity of internal auditor has an affect on the prevention of fraudulent financial reporting.