The Effect of Fraud Prevention, Fraud Detection, Investigative Audits, and Professionalism of Auditors on Efforts to Minimize Fraud in the Financial Statements of Companies in Makassar City, Indonesia NATALIA PARANOAN 1 , SITA YUBELINA SABANDAR 1 , ANTHON PARANOAN 2 , ELISABET PALI 3 , ISAK PASULU 3 1 Faculty of Economics and Business, Universitas Kristen Indonesia Paulus, INDONESIA 2 Faculty of Informatics & Computer Engineering, Universitas Kristen Indonesia Paulus, INDONESIA 3 Faculty of Economics and Business, Universitas Kristen Indonesia Toraja, INDONESIA Abstract: - The purpose of this study was to examine the effect of fraud prevention, detection, investigative audits, and professionalism of auditor on efforts to minimize fraud in financial statements. This study uses primary data by using questionnaires where the questionnaires are distributed to internal auditors who work in companies in Makassar City, Indonesia. Sample determination was done by using convenience sampling. The number of respondents in this study were 52 internal auditors. Data analysis to test the hypothesis was done by using multiple regression test. The results of this study indicate that partially, preventive measures and professionalism of auditor have significant effect on efforts to minimize fraud, while partially fraud detection and investigative audits have no significant effect on efforts to minimize fraud. However, simultaneously, the four variables of fraud prevention, detection, investigative audit, and professionalism of auditor have a significant effect on effort to minimize fraud. Key-Words: - Fraud Prevention, Detection, Investigation Audit, Professionalism of auditor, Minimize Fraud Received: March 23, 2021. Revised: February 15, 2022. Accepted: March 21, 2022. Published: April 19, 2022. 1 Introduction Fraud is an intentional or carelessness in doing something or not doing something that should be done so that the financial statements are materially misleading [2], [3]. The management as the controller of the control structure is very responsible for any transaction activities that take place in a company who he leads in one period. The responsibility carried out by the management towards the shareholders (owner) is how the financial statements prepared by the management can be presented fairly. However, in reality there are still many companies that have not presented financial statements fairly and even indicated fraud. For example, several cases in Indonesia, namely the Century Bank scandal. Data relating to the Bill Out disbursement of funds of 6.7 trillion through the Short-Term Funding Facility which was disbursed by Temporary Equity Participation funds by Bank Indonesia through LPS to Century Bank. [22]. The case at Bank BRI Riau in Sumatra, where the Branch Head made a fictitious transfer of Rp. 1.6 billion. The Branch Head made false records in the books or reports or documents of business activities [23]. The case that is also interesting namely the misappropriation of Electronic Identity Card (E-KTP) funds also shows that the temptation to commit fraud is very strong and does not look at position. While an example of a case abroad such as in the Company in America is the case of Enron which caused bankruptcy amounting to US $ 60 billion lost in a very large market capitalization for a significant number of investors, employees and retirees [22]. Other cases are Xerox, Kmart, Qwest Communication International, Woldcom, Adelphia, Tyco, and Duke Energy [22]. From the various cases above, it is very necessary to have an Internal Audit that has a fraud examination technique. The factors that influence the success in carrying out fraud management, one of which is influenced by the implementation of fraud prevention, fraud detection, audit investigation, and professionalism. Several previous studies, namely Adha (2013) examined fraud prevention, fraud detection, and investigative audits in minimizing financial statement fraud at Bank Cimb Niaga Surabaya. Results showed that all variables had a positive effect on minimizing fraud [1]. In [21], detecting fraud in financial statements and the results are WSEAS TRANSACTIONS on INFORMATION SCIENCE and APPLICATIONS DOI: 10.37394/23209.2022.19.6 Natalia Paranoan, Sita Yubelina Sabandar, Anthon Paranoan, Elisabet Pali, Isak Pasulu E-ISSN: 2224-3402 54 Volume 19, 2022
The Effect of Fraud Prevention, Fraud Detection, Investigative Audits, and Professionalism of Auditors on Efforts to Minimize Fraud in the Financial Statements of Companies in Makassar
Jul 06, 2023
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