CONFERENCE PROCEEDING - Unissula

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6 ^th ASEAN UNIVERSITIES

INTERNATIONAL CONFERENCE ON ISLAMIC FINANCE

(6 ^th AICIF)

14th - 15th November 2018

New World Makati City, Manila, Philippine

CONFERENCE

PROCEEDING

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CORPORATE GOVERNANCE

ISLAMIC BANKING AND CAPITAL MARKET

MONEY PAYMENT SYSTEM &

FINANCIAL INNOVATION

TAKAFUL & RISK MANAGEMENT ISLAMIC SOCIAL FINANCE

ARABIC PAPERS 1. 2.

3. 4. 5.

6.

SUB THEMES

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CORPORATE

GOVERNANCE

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Sub Theme Corporate Governance

No Paper ID Paper Title Author(s) Affiliation

1 6th AICIF:

083-075

Tax Amnesty and JIHAD on CV. SR

(Phenomenology Study) Ahmad Rudi Yulianto

Universitas Islam Sultan Agung (UNISSULA), Indonesia

2 6th AICIF:

039-032

Good Corporate Governance, Earnings Quality, and Firm Value:

Empirical Study on Jakarta Islamic Index Companies 2008-2015 using Structural Equation Model-Partial Least Square Method

Sugiyarti Fatma Laela, Dian Yuni Anggraeni, Rahma Wijayanti

Sekolah Tinggi Ekonomi Islam (STEI) Tazkia, Indonesia

3 6th AICIF:

076-063

Taawun: An Islamic Practice to Reduce Voluntary Turnover Intention

Ken Sudarti, Alifah Ratnawati, Mulyana,

M. Husni Mubarok

4 6th AICIF:

079-066

Successful Determinant of Islamic

Knowledge Organization Marno Nugroho

5 6th AICIF:

082-069

The Effectiveness of Internal Control, Organizational Ethical Culture, and Fraud Prevention: The Role of Moderating Individual Morality

Provita Wijayanti, Rustam Hanafi, Nurhidayati

6 6th AICIF:

084-071

Critics on the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) from Shariah Banking and Investment

Hakimah Yaacob,

Khairul Hidayatullah Basir

Universiti Islam Sultan Sharif Ali (UNISSA), Brunei Darussalam

7 6th AICIF:

084-072

Enabling Legal Environment of Islamic Finance in Brunei: A Demand for Improvement

Hakimah Yaacob,

Khairul Hidayatullah Basir

Universiti Islam Sultan Sharif Ali (UNISSA), Brunei Darussalam

8 6th AICIF:

088-076

The Impact of Collaborative Networks and Islamic Works Ethic on Business Performance of Small and Medium Enterprises

Mulyana

Universitas Islam Sultan Agung (UNISSULA), Indonesia 9

6th AICIF:

090-078

Corporate governance from Islamic

perspective Abdulrahman Alnofli

International Islamic University Malaysia

10 6th AICIF:

093-082

Corporate Social Responsibility in

Islamic Perspective Chrisna Suhendi

11 6th AICIF:

094-084

Internal Control, Acceptance of Compensation and Unethical Behavior as a Predictor of Trends in the Establishment of Fraud

Khoirul Fuad

12 6th AICIF:

101-125

Earnings Management of Family Generation Company in Indonesia:

Socio Emotional Wealth (SEW) Theory Perspective

Edy Suprianto, Y Anni Aryani, Doddy Setiawan, Rahmawati

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13 6th AICIF:

081-103

The Role of Partnership in Improving SMEs Reputation: An Islamic Outlook

Tri Wikaningrum, Imam Ghozali, Ahyar Yuniawan

14 6th AICIF:

134-127

The Analysis of Online Shopping

Satisfaction in Islamic Perspective (Case Study to Student Of

University Of Darussalam Gontor Campus Magelang On Period 2017)

Mustaan Al Faruqi, Mufti Afif

University of Darussalam (UNIDA) Gontor, Indonesia

15 6th AICIF:

155-146

Short-run and Long-run

Relationship between Economic Growth, Foreign Direct Investment, Trade Liberalization and Education on Income Inequality: Evidence from Indonesia

Siti Nur Azizah, Neneng Ela Fauziyah

UIN Sunan Kalijaga, Indonesia

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6^thASEAN Universities International Conference on Islamic Finance (AICIF), Manila, Philippines 14th & 15th November 2018

The Effectiveness of Internal Control, Organizational Ethical Culture, and Fraud Prevention: The Role of Moderating

Individual Morality

Provita Wijayanti

^a

Rustam Hanafi

^b

Nurhidayati

^c

aDept. of Accounting, Faculty of Economics, UNISSULA, Semarang, Indonesia

bDept. of Accounting, Faculty of Economics, UNISSULA, Semarang, Indonesia

cDept. of Management, Faculty of Economics, UNISSULA, Semarang, Indonesia

Abstract

Village funds around trillions of rupiah that have been started since 2015 can trigger not responsible parties for manipulating it. The number of funds disbursed required fraud prevention measures including strengthening the effectiveness of internal control and ethical culture of the organization in the village government. Moderation of individual morality on the relationship of the effectiveness of internal control and ethical culture of organizations with the fraud trends need to be proven. Research samples are 40 devices from 20 villages in Sayung, Demak, Central Java, with a minimum of 3 years of service. Individual morality has proven to moderate the relationship between organizational ethical culture and fraud trends but it does not moderate the effect of internal control effectiveness on fraud trends.

Keywords: the effectiveness of internal control, organizational ethical culture, individual morality, fraud trends.

1. Introduction

2015 is as the first year of disbursing State Budget (APBN) funds to the village government. The disbursement of trillions of rupiah in village funds will be carried out in 3 stages each year. The village funds that have been disbursed will be directly transferred from State General Cash Account (RKUN) to Regional General Cash Account (RKUD) held by the Regency / City Government.

According to the Inspectorate General of Ministry of Home Affairs, the allocation of funds around Rp. 800 million to Rp. 1.4 billion for each village is determined based on certain instruments and variables.

Based on PP No. 60 of 2014, village funds for each district/city are allocated based on the multiplication of the number of villages in each district/city and the average village funds for each province. The population, area, and poverty rate are calculated as 30% for the district/city population, 20% for the district/city area and 50% for the district/city poverty rate. The aspects that are considered are population, area, geographical difficulties, Proverty Depth Index (IKK), and Village Welfare Index (IKD). The process of the fund will be channeled into RKUD and the calculation will be included in Regional Revenue and Expenditure Budget (APBD) Regency/City. It is then transferred to APBD village.

The government has compiled several regulations as an additional legal protect to maintain the effectiveness of village fund disbursement. Such as PP No. 43 of 2014, this PP regulates the matter of forming/merging villages, the authority of the village, the income of the head and village apparatus, financial management and village wealth. Besides that, Goverment Reglation No. 60 of 2014 is also issued concerning village funds sourced from APBN which contains the process of budgeting village funds in APBN, the

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process of calculating village fund allocations by the government and district/city; the process of distributing village funds related to the distribution mechanism; the reporting process from the village government to the district / city government and the process of monitoring and evaluating the use of village funds. The regulatory umbrella for village fund disbursement will be supplemented by a legal umbrella to guide the implementation of the both Goverment Regulation, namely the finance minister's regulation and the Minister of Home Affairs Regulation. This finance minister's regulation regulates budget procedures, allocation, distribution, use, and monitoring and evaluation of village funds. While the minister of the interior will issue regulations on village financial management, both sourced from APBN, APBD, and other sources of village income.

The village financial management so that it is in line with government targets and targets requires the involvement of various parties to provide assistance to village officials in planning, budgeting programs and activities, as well as village financial management, including reporting and activities. Previous research has shown the effectiveness of internal control effectiveness and individual morality on fraud trends (Wijayanti, 2018). The study also reports that the ethical culture of the organization does not affect fraud trends. Therefore this study aims to examine whether individual morality can act as a factor that moderates the relationship between the effectiveness of internal control and the ethical culture of organizations with fraud trends.

The basis of this research is the agency theory and GONE theory (greeds, opportunity, needs, and exposure). In the agency, the theory is defined as the relationship between the principal (owner) and agent (management) in detecting fraud. Agency theory aims to solve problems in the agency relationship between principal and different agency (agency problems). Agency theory has three assumptions, namely self-interest, bounded rationality, and risk-averse. Self-interrelation is the selfish behavior trend, bounded rationality, namely the limitation of future perceptions, and risk-averse, namely the act of not liking risk (Kusumastuti and Meiranto, 2012). Theory of GONE told about greeds, opportunities for fraud (opportunities), individual needs that encourage fraud (needs), and legal consequences for the fraud that are considered relatively mild (exposure).

The internal control system is a system that is chosen and made to avoid various fraudulent actions that will occur because if an ineffective control system still allows fraud. Through an effective internal control process, a manager/leader is required to try to make quick and correct decisions. Managers must be more aware of the circumstances that exist within the company from the work environment to the activities that occur so that decisions made by managers can be right and correct. Managers must also take full responsibility for the decisions that have been taken and are obliged to implement the decision (Adelin and Fauzihardani, 2013).

The fraud trend can be influenced by the presence or absence of opportunities or opportunities.

Great opportunities to make fraud trends more often, otherwise small opportunities to make fraud trends can be avoided. The effectiveness of internal controls supported by adequate rules can prevent various forms of irregularities and overstated which will harm various stakeholders (Wright, 2003).

Kusumawati and Meiranto (2012), Thoyibatun (2012), Adelin et al. (2013), Wijayanti (2018), Pramudita (2013) found a negative effect of the effectiveness of the internal control system on fraud trends.

H1: the effectiveness of the internal control system negatively affects the fraud trend

The organizational ethical culture is a shared belief in the ethics of organizational members. It shows that organizations have identifiable cultures such as ethical culture. Organizational ethical culture is aspects of organizational culture and behavior that encourage organizations to operate sustainably (Riivari et al., 2012). In contrast to the ethical climate as aspects that determine what constitutes ethical behavior, ethical culture is aspects that stimulate ethical behavior. The company's ethical culture is regarded as a combination of individual manager's ethical values and formal and informal policies on organizational ethics. The concentration of an organization's ethical culture lies in leadership and the role of managers in carrying out an ethical culture in an organization. Researchers who use the term ethical organizational culture believe that when ethical standards and norms are accepted and observed by top managers and shared widely among organizational members, organizational success can increase (Baker et al., 2006).

The perceived ethical culture of the organization is largely related to the ethical decision making of individuals in the organization. According to Sweeney et al. (2009), perceived ethical culture is the impetus

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of top management and also from the organization to make ethical decisions and avoid unethical behavior. In fact, the perceived ethical culture is the perception of individuals who have faced ethical and unethical dilemmas in the workplace. A perceived ethical culture provides an understanding of how individuals shape their values in making ethical decisions based on ethical culture in their organizations (Lamontagne, 2012).

A strong organizational ethical culture according to agency theory can reduce the trend of fraud.

Through an organization's ethical culture, good behavior can be influenced and a good ethical culture of the organization can improve the success of the organizational performance. A good ethical culture of organizations can lead organizations to achieve better goals. Najaningrum (2013) and Artini et al. (2014) found that there was a negative influence on the organization's ethical culture on fraud trends.

H2: organizational ethical culture has a negative effect on fraud trends.

Individual morality is a moral standard that applies to individuals. Standards that determine the faulty, impossible, and individual actions of individuals, but can also include conclusions about values, about the best ways to live which are also commonly referred to as morals (Scanlon, 2016). Moral always refers to the good and bad of humans as human beings, so that the field of morality is the field of human life seen in terms of its goodness as a human being. Morals have a positive value as a term or predicate term to refer to humans as one to another. Morality is a true moral attitude (Magnis, 2001).

Individual morality is a form of ethical consideration as considerations that must be taken to anticipate ethical dilemmas (Wibowo, 2007). Morality is one of the factors of fraud trends. Morality is an internal factor in an individual. Morality is included in the GONE theory. Morality is a manifestation of the attitude of one's heart which is revealed in real action. Morality is a good deed and attitude that really does not expect a reward. The act of ignoring morality (unscrupulous) is the reason underlying fraud trends. The government can reduce the likelihood of fraud trends by knowing the nature and characteristics of humans who are most likely to commit fraud. Researches that have successfully demonstrated the effect of individual morality on fraud trends include Dewi (2014), Kaukab and Damayanti (2015), and Wijayanti (2018) shows that individual morality affects the fraud trends.

Individual morality in the research of Puspasari and Suwardi (2012) is a moderating variable from the relationship of internal control with the fraud trends, while in the research of Eliza (2015) has a negative effect on the fraud trend. Although the internal control system applied is effective, if individual morality is not good, the fraud trend can still occur. Individuals in organizations with high morality with or without the existence of an internal control system that is implemented will not be tempted to commit fraud, whereas individuals with low morality even though there is an internal control system they will still try to find ways to commit fraud.

H3: individual morality moderates the effect of the effectiveness of internal control on fraud trends.

A good ethical culture of organizations can lead organizations to achieve better goals. However, the ethical culture of the organization is also influenced by individual commitment to the organization so that the ethical culture of the organization cannot directly influence the fraud trends committed by the apparatus/village apparatus if it is not accompanied by high commitment from village officials to comply with the values or code of ethics of the government (Wijayanti , 2018).

H4: individual morality moderates the influence of organizational ethical culture on fraud trends.

2. Material and Method

2.1 Population and Sample

The population of this study was village officials from 25 villages in Sayung District amount of 125 people.

It is then choosen 40 people to be sampled provided that they had worked for at least 3 years in the village.

2.2 Operationalization Variable

The fraud trend is measured by five (5) indicators developed by Wipolo (2006) which include: (1) the trend to manipulate, counterfeit, or change accounting records or supporting documents, (2) the trend to make

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incorrect presentations or eliminate events, transactions , or significant information from financial statements, (3) the trend to erroneously apply accounting principles intentionally, (4) the trend to make spurious financial statements due to theft (misuse / embezzlement) of assets that make the entity pay for goods/services that are not received, (5) the trend to make false financial statements due to improper treatment of assets and accompanied by false records or documents and may involve one or more individuals between management, employees, or third parties. The five indicators are measured with a Likert scale of 1 to 5. The 5 Likert scale is used to measure the subject's response to 5 points at the same interval. All variables (indicators) are given 5 alternative answers, they are: Strongly Agree (SS), Agree (S), Neutral (N), Disagree (TS), and Strongly Disagree (STS).

Internal control effectiveness is also measured by 5 (five) indicators developed by Wipolo (2006) which include: (1) the application of authority and responsibility, (2) transaction recording, (3) physical control, (4) accounting system, (5) monitoring and evaluation. The five indicators are measured with a Likert scale of 1 to 5. The 5 Likert scale is used to measure the subject's response to 5 points at the same interval.

All variables (indicators) are given 5 alternative answers, such as: Strongly Agree (SS), Agree (S), Neutral (N), Disagree (TS), and Strongly Disagree (STS).

Organizational ethical culture is a guide to the behavior and scope of work of employees or village apparatus in Sayung District. Organizational ethical culture measured by indicators developed by Pramudita (2013) includes visibility of employee models and roles, ethical communication, ethical behavior training, sanctions for unethical behavior, and ethical preservation procedures. These indicators are prepared in the form of questionnaires with the choice of answers Strongly Agree (SS), Agree (S), Neutral (N), Disagree (TS), and Strongly Disagree (STS) which are assessed on 1-5 Likert scale.

Individual morality is something that underlies the rational assessment of individual actions and is in accordance with a conscience (Prawira et al., 2014). Individual morality is also assessed by 1-5 Likert scale and 5 answer choices Strongly Agree (SS), Agree (S), Neutral (N), Disagree (TS), and Strongly Disagree (STS). Individual morality is identified from indicators which include: financial statements are presented accurately, do not receive bribery in any form, loyalty to work, standard preparation of financial statements, and attention to external and internal factors (Puspasari & Suwardi, 2012).

2.3 Data Collection Technique

The data collection technique of this study was primary data collection obtained from questionnaires to village officials in Sayung Subdistrict who were selected as samples. The research questionnaire contains closed questions with the choice of answers strongly agree to strongly disagree with the 1-5 Likert scale score.

2.4 Data Analysis

The data of this study were analyzed by moderated regression analysis (MRA). Before performing the regression analysis, descriptive statistical tests and classical assumption testing included residual normality testing with Kolmogorov Smirnov test, multicollinearity test (VIF value), autocorrelation test (run test) and heteroscedasticity test with glejser test. In this study also conducted a model feasibility test using simultaneous test and determination coefficient. Acceptance of the hypothesis (partial test) is done by looking at the significance value of each coefficient in the regression equation as follows:

Fraud trend =

Y = a + β1X1 + β2X2 + β3X1X3 + β4X2X3+ e Y = fraud trend

a = constant

β1-4 = regression coefficient X1 –X3

X1 = Internal Control Effectiveness X2 = Organizational Ethical Culture X3 = Individual Morality

e = residual/error value

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5 3. Result

The results of descriptive statistical analysis of the research variables are as follows:

Table 1. Descriptive Statistical Result

Variables N Range Minimum Maximum Mean Std. Deviation

X1 40 6 19 25 22.18 1.933

X2 40 10 15 25 20.82 2.510

X3 40 10 15 25 21.62 2.835

Y 40 11 5 16 8.30 2.893

Source: primary data processed, 2018

Based on Table 1, it is known that the effectiveness of the internal control system (X1) has a range score from 19-25 with an average of 22.18 and a standard deviation of 1.933. Organizational ethical culture has a range score from 15-25 with an average of 20.82 and a standard deviation of 2.510. Individual morality has a range score from 15-25 with an average of 21.62 and a standard deviation of 2.835. In addition, the fraud trend has a range score from 5-16 with an average of 8.30 and a standard deviation of 2.893.

The results of the classical assumptions test of this study which include normality, multicollinearity, autocorrelation, and heteroscedasticity are as follows: Kolmogorov Smirnov test obtained the p-value of 0.082 indicating the residual data is normally distributed. The assumption of multicollinearity is not fulfilled, indicated by the acquisition of VIF values far greater than 10. Symptoms of multicollinearity are difficult to fulfill by MRA. Based on the results of the Run test obtained the p-value of 0.631 shows a regression model free of symptom autocorrelation, and from the Glejser test, there is not a single independent variable that is significant to the absolute value of residuals so that the regression model is free heteroscedasticity.

The results of testing hypotheses are shown in Table 2. The variable effectiveness of the internal control system (X1) which is partially tested has a regression coefficient of -0.875 with a sig (p) value of 0.666; because the p value> 0.05, the H1 hypothesis is rejected, meaning there is no effect of the effectiveness of the internal control system on fraud trends.

Table 2. Hypothesis Testing Result

Model Unstandardized Coefficients Standardized

Coefficients t Sig.

B Std. Error Beta

1 (Constant) -46.137 45.503 -1.014 .318

X1 -.875 2.009 -.585 -.436 .666

X2 3.796 1.664 3.294 2.281 .029

X3 3.133 2.037 3.070 1.538 .133

X1X3 .008 .089 .278 .094 .925

X2X3 -.170 .074 -6.017 -2.280 .029

Source: primary data processed, 2018

Organizational ethical culture variables (X2) tested partially have a regression coefficient value of 3.796 with a sig (p) value of 0.029; although the p-value obtained <0.05 but because the direction of the regression coefficient obtained is not in accordance with the expectation so that H2 hypothesis is also rejected, it means that the ethical culture of the organization does not negatively affect the fraud trends.

The interaction variables between the internal control system and individual morality have a regression coefficient value of 0.008 and a value of p = 0.925; because the value of p> 0.05 then hypothesis 3 (H3) is also rejected, meaning that individual morality does not moderate the effect of the effectiveness of internal control on fraud trends.

The interaction variables between the ethical culture of the organization and individual morality have a regression coefficient of -0.170 and a value of p = 0.029; because the value of p <0.05, so that hypothesis 4 (H4) is accepted, meaning that individual morality moderates the influence of organizational ethical culture on fraud trends.

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ANOVA test or F test results in a p-value of 0,000 (p <0.05) indicating that the regression model can be used to predict fraud trends or it can be said that the effectiveness of internal control, organizational ethics and moderate culture (individual morality) influence fraud trend.

The determination coefficient test results obtained the adjusted R2 value of 0.420. This means that 42.0% of fraud inclination variables can be explained by variations in independent variables which include the effectiveness of internal control, ethical organizational culture, and moderate individual morality, while the remaining 58% is influenced by other factors.

4. Discussion

The effectiveness of the internal control system in the research does not affect the fraud trends. This result is caused by the cause of fraud not only from external factors but also can come from internal factors within the perpetrators of fraud. In addition, the internal control system can prevent fraud if the internal control system is well designed and implemented, if employees are given good training, and perform tasks well.

The internal control system can prevent fraud if individuals who are given the mandate to supervise are given a sense of responsibility and emphasized a "risk culture". By making every level in the organization aware of the risks that can discredit the organization, which results in financial risk, each individual in the organization will do their duties and responsibilities with full awareness (Tuanakotta, 2007). The results of the study on the unproven influence of the internal control system on fraud trends are also shown by Wilopo (2006) that internal control of government bureaucracy has a negative influence on fraud, but this effect is not significant.

Organizational ethical culture has proven to influence fraud trends, but the direction of the regression coefficients produced is positive, not in accordance with the hypotheses. Organizational Ethical culture should make people have better intentions, or behave according to norms and ethics so that when someone does unethical actions will make his or her feel uncomfortable to commit fraud. But this study do not show such those results, the high ethical culture of the organization causes the fraud trends to be high.

The contribution of the high organizational ethical culture to fraud trends in this study was due to the implementation of the ethical protection mechanism for village officials. So that because they feel they get ethical protection, they will be comfortable to do fraud. The positive influence of the organizational ethical culture on the fraud trend in this study contradicts the results of previous studies as conducted by Najaningrum (2013) and Artini et al. (2014).

Individual morality in this study is not proven to moderate the influence of the internal control system on the fraud trends in village government. That means, when individuals with high or low morality are effective or not, the internal control system does not affect individuals in conducting fraud trends in the village government. These results indicate that individual morality is not an important part of individuals in committing fraud. Fraud actions are more likely to occur due to opportunities, greeds, rationality, and pressure from others. This research is consistent with the research of Tehupuring and Lingga (2017) which explains that fraud cannot occur without opportunities, pressure, and rationality.

Individual morality proved to moderate the influence of organizational ethical culture on fraud trends. Organizational ethical culture in this study has a positive effect on the fraud trends, with high individual morality. The positive influence of the organizational ethical culture on fraud trends can be weakened. Integrating good organizational ethical culture with high individual morality can prevent the emergence of the desire to do things outside the organization's rules (Tuanakotta, 2007). The effect of individual morality moderation on the influence of the organizational ethical culture on fraud trends is in line with the research findings of Wijayanti (2018) that the ethical culture of an organization is also influenced by individual morality, although there is ethical protection for the village apparatus but if the ethics protection is not in accordance with the norms morally, an individual would prefer to take the right action and choose to avoid risk (risk averse).

The implication of the results of this study is the importance of fostering the morality of individual village officials in the Sayung sub-district in order to avoid fraud. Limitations in the number of samples in the study are thought to be the cause of the minimum accepted hypothesis. Further studies can expand sampling to other sub-districts in order to obtain a larger sample size. Based on the results of the descriptive analysis it is known that the internal control system applied by the village government in Sayung Sub-district has been included effectively, the organizational ethical culture applied has also been good, and the individual morality

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of the equipment is also high so the fraud trend is also low. However, these results cannot prove the effect of the effectiveness of the internal control system, the ethical culture of the organization and individual morality towards the fraud trend as hypothesized. Many factors influence the fraud trends, Indriani et al. (2016) mentions situational pressure, the effectiveness of internal control, and the level of individual morality;

Istanty (2016) mentions the existence of complaint channels; the research of Rizki and Fitri (2017) mentions compliance with accounting rules, effective internal control and unethical behavior; and Tehupuring and Lingga 2017 mention individual loyalty as a factor that moderates the influence of the internal control system on fraud trends.

5. Conclusion

Based on the results and discussion, the following conclusions are obtained:

1. The effectiveness of the internal control system does not affect the fraud trends.

2. Organizational ethical culture does not negatively affect fraud trends.

3. Individual morality is not a moderating variable on the effect of internal control systems on fraud trends.

4. Individual morality is a variable that moderates the influence of organizational ethical culture on fraud trends.

Based on the results and discussion, this research also obtained the following suggestions:

As mentioned in the agency theory and GONE theory, in order to prevent fraud behavior, what must be done is to reduce the level of greed within individuals, narrow the opportunities for fraud, provide for the needs and provide appropriate legal consequences. While related to agency theory, it is necessary to strive for behaviors that are not only selfish, do not consider fair fraud behavior, and strive for individuals to be afraid of the risks they will receive if they commit fraud.

Future research needs to expand the scope of the research location to obtain a larger number of samples and can be generalized to other village governments. Future research also needs to include other factors that influence fraud such as compensation factors, situational pressure, the existence of complaints channels, adherence to accounting rules, and others.

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