THE 10th ISLAMIC BANKING, ACCOUNTING AND FINANCE INTERNATIONAL CONFERENCE 2022
(iBAF 2022)
Fraud Occurrence During Goods/Services Procurement in an Indonesia Regional Revenue Agency
Hardiwinoto
Faculty of Economics, Universitas Muhammadiyah Semarang (UNIMUS), Semarang, 50273, Jawa Tengah, Indonesia
Tel: +62 24 767 40296 E-mail: [email protected]
Firdaus Iqbal Tawakal
Universitas Semarang (USM), Semarang, 50196, Jawa Tengah, Indonesia Tel: +62 24 6702757 E-mail: [email protected]
Dyah Nirmala Arum Janie
Faculty of Economics, Universitas Muhammadiyah Semarang (UNIMUS), Indonesia Tel: +62 24 767 40296 E-mail: [email protected]
Abstract
Based on data from the KPK version, corruption cases in the scope of goods and services procurement occupy the second highest place in Indonesia after the first positive that most often occurs in bribery. Various cases are found in government agencies related to fraud or acts of fraud. Implementing the procurement process for goods and services is also found to be subject to indications of fraud even though there are regulations by the government. This study aims to empirically prove the effect of committee quality, internal control system, procurement environment, procurement committee ethics, and procurement committee income on fraud. The number of research samples was 45 samples. The data analysis technique used is the classical assumption test, which consists of a normality test, multicollinearity test, linearity test and heteroscedasticity test. Data analysis to test the hypothesis is to use multiple regression analysis and techniques. This study uses primary data by listing questionnaire sheets distributed to respondents who are employees of a Regional Revenue Service. Based on the results of the research shows that (1) the quality of the committee has an effect on fraud, (2) the internal control system has an effect on fraud, (3) the procurement environment has no effect on fraud, and (4) the Ethics of the Procurement Committee has no effect on fraud, and (5) income The Procurement Committee has no effect on fraud.
Keywords: Quality Committee; Internal Control System; Procurement Environment; Procurement Committee Ethics; Procurement Committee Income; Fraud; Procurement of Goods and Services
1. Introduction
Various cases are found in government institutions related to fraud or acts of fraud. The rapid development of a complex business followed by various available business opportunities and increasingly rampant investment raises the risk that fraud can quickly occur in government institutions. Referring to the various incidents of fraud that have occurred both domestically and abroad, we can conclude that fraud has the potential to occur with a high degree of possibility regardless of place and time. (Wahono, 2011) in Rahmayani et al. (2014).
Various experts interpret the fraud as only a tiny part of what happened, except for the fraud detected by the auditor, who in this case is responsible for examining financial statements in both an organization and a company.
Based on the 2019 Corruption Perception Index (CPI) published globally by Transparency International, the State of Indonesia occupies the 85th position out of 180 countries with a score of 40. This shallow score shows that efforts to eradicate corruption are still far from successful, and the government's commitment to establishing good governance and better governance must be questioned (Kadir, 2017).
The phenomenon that exists in Indonesia, reported by the British Broadcasting Corporation Indonesia (2017), there was a case of alleged bribery related to the provision of WTP opinions on a budget of the Ministry of Villages, Development of Disadvantaged Regions and Transmigration (Kemendes PDTT) by the Supreme Audit Agency (BPK). In this case, the Corruption Eradication Commission has named four suspects: the Inspector
General and echelon III officials of the Kemendes PDTT, echelon I officials and the BPK auditor. In addition, Republika.co.id (2017) reported that in the period 2015 to 27 May 2017, there were 23 auditors or BPK officials involved in bribery cases, such as bribes to obtain WTP or WDP opinions, bribes to change BPK findings, and bribes to help smooth the audit process.
The risk of fraud in providing opinions on financial statements is an important reason for the need for reasonable efforts and strategies to prevent fraud. The responsibility for preventing fraud rests with management, leadership, and other authorities interested in achieving organizational goals. However, the auditor also plays an active role and is responsible for assisting management in preventing fraud.
This fraud case was widespread in Indonesia. ACFE, or the Association of Certified Fraud Examiners, has conducted a survey in which the results shown are related to the incidence of fraud in Indonesia, which is rampant, including cases in the form of corruption. Number two is the misuse of state or company assets, followed by a fraudulent presentation of financial statements as the third case—the most in Indonesia.
As many as 67% are the most significant percentage of fraud in Indonesia. This percentage illustrates the number of corruption cases that occupy the number one position as the most fraud cases, followed by 31% in the form of fraudulent abuse of company assets and state assets. The last is a fraudulent presentation of financial statements with a percentage of as much as 2%.
Acts of corruption. In Indonesia, various cases classified as corruption include various efforts, such as procuring goods and services, bribery, licensing, misuse of funds or budgets, levies that do not follow regulations, and money laundering offences, to hinder the KPK investigation process. From this, corruption cases manifested in procuring goods or services became the most common acts of corruption in Indonesia. This fact follows the results of data released by the Indonesia Procurement Watch. It demonstrates that 70% of corruption cases in Indonesia are in the form of irregularities when procuring the need for services or goods. This one factor needs to pay special attention to because it is very vulnerable to causing fraudulent practices. Implementing the procurement process for goods and services is still exposed to indications of fraud even though there have been regulations by the government as stated in Presidential Decree No. 80/th.2013. It has also been regulated in several amendments to Presidential Regulation No. - This regulation aims to ensure that the procurement process of goods and services has guidelines to run effectively and efficiently. Based on the data from the KPK version, corruption cases that occur in the procurement of goods and services occupy the second highest place in Indonesia after the first position, where the most cases are bribery.
A factor can trigger a financial leak when the procurement of goods/services is related to the ethics of the procurement committee. There are also various acts of irregularities that do not obey ethics. For example, abuse of organizational resources or what is known as an abuse of resources, then abuse of position or abuse of position, then abuse of power or what is called abuse position and coupled with the absence of any actions or so-called with no action aspect.
One fraud that often occurs in government agencies is corruption in procuring goods and services. In government agencies, there is an opportunity to corrupt money used for procurement purposes. Money and operational goods can serve as objects for corruption. Therefore, there is an important relationship between acts of fraud and the procurement of goods and services in government agencies.
Table 1: Research Gap.
No Variable Researchers
Independen Dependen Zulaikah &
Hadiprajitno (2016)
Sari &
Suartana (2020)
Nurhajanti (2017)
Hidayati
& Mulyadi (2017)
Setiawan, Alfianto,
& Kusumo (2019) 1 Financial pressure Fraud Insignificant
Effect 2 Weak systems and
procedures
Fraud Positive Significant Effect 3 Lack of committee
quality
Fraud Positive Significant Effect
Negative Significant Effect
Positive Significant Effect
Negative Significant Effect
4 Attitude Fraud Positive
Significant Effect 5 Subjective Norm Fraud
Intention
Positive Significant Effect 6 Perceived
behavioural control Fraud Intention
Positive Significant Effect 7 Fraud Intention Fraud Positive
Significant Effect 8 Procurement
committee compensation
Fraud Insignificant
Effect Negative
Significant Effect
9 Internal Control System
Fraud Negative
Significant Effect
Positive Significant Effect 10 Good/Service
Provider Quality
Fraud Negative
Significant Effect 11 Procurement
System &
Procedures
Fraud Negative
Significant Effect
Negative Significant Effect
Negative Significant Effect 12 Procurement
environment
Fraud Insignificant
Effect
Insignificant Effect
13 Risk Assessment Fraud Positive
Significant Effect 14 Procurement
Ethics
Fraud Negative
Significant Effect
Insignificant Effect
Negative Significant Effect
Negative Significant Effect 15 Procurement
Committee Income
Fraud Insignificant
Effect
The purpose of this study is: to provide empirical evidence of the influence of committee quality, internal control system, procurement environment, procurement ethics, and committee income on fraudulent procurement of goods/services.
2. Literature Review
2.1. The logical relationship of the committee's lack of quality to fraud
A procurement committee is a party related to the procurement process of goods/services in which the party has the authority to make decisions related to the bidding process and work services during the procurement process of goods/services. The procurement committee performance results embody a decision on selecting suppliers/partner providers who will supply the needs for procuring goods and services. Then a work contract will be made, which includes several agreements or cooperation agreements. In order to achieve the goal of optimal procurement of goods/services, we need a good quality procurement committee. We can see and assess based on various indicators such as competence, integrity, objectivity, and independence from the procurement committee.
If the quality of the committee, whether in terms of competence, integrity, objectivity, or independence, turns out to be inadequate, it risks triggering various opportunities for individuals and groups to commit fraud. It aligns with research by Zulaikha and Paulus Th Basuki Hadiprajitno (2016), which shows an influence on the Quality of the Committee on fraud.
H1: Lack of Committee Quality Affects Fraud
2.2. The logical relationship of the internal control system to fraud
All employees must provide adequate confidence to achieve organizational goals through practical and efficiency, reliability of financial reporting, safeguarding state assets, and compliance with laws and regulations.
According to article 1 point 1 of the Government Regulation of the Republic of Indonesia Number 60 of 2008, the internal control system is an integral process of actions and activities carried out continuously by the leadership. Article 3 further explains that the internal control system consists of elements of the control environment, risk assessment, control activities, information and communication and monitoring.
The implementation of a good Internal Control System can suppress the occurrence of fraud. In the procurement of goods and services, the Internal Control System can be applied to start from procurement planning to the implementation of procurement so that these actions can reduce the potential for fraud in the procurement of goods/services. It also aligns with research by Nur Hidayati & J.M.V Mulyadi (2017), which shows the influence of the Internal Control System on fraud.
H2: Internal Control System Affects Fraud
2.3. The logical relationship of the procurement environment to fraud
Procurement systems and procedures will constantly interact with the environment in which they are implemented. The environment is one factor that affects a procurement system of goods/services to achieve the goals. An honest and incentivized environmental condition can reduce the level of fraud committed. The better the environment for procuring goods and services, the more indications of fraud when procuring goods/services
might fall. It follows the results of the data obtained by Nashirotun Nisa Nurhajantii with statements related to the Procurement Environment that affect the actions of fraud.
H3: Procurement Environment Affects Fraud
2.4. The logical relationship of procurement ethics to fraud
In agency theory, the principal wants the agent to do his job well following the work contract and applicable ethics for the institution's benefit. Applying ethics in work is essential for agents to carry out their work. Ethics are norms, rules and moral values that apply (Pepper & Gore, 2015). The application of ethics in procuring the need for goods or services can prevent the risk of fraud. The ethic should be responsible, prevent leakage and wastage of finances and comply with laws and regulations. Procurement Ethics is a factor influencing fraud in procuring goods and services. It follows research conducted by Ni Kadek Indah Permata Sari and I Wayah Suartana (2020).
H4: Procurement Ethics Affects Fraud
2.5. The logical relationship of procurement committee income to fraud
Another aspect that needs to consider in realizing an objective procurement process is the income of the Procurement Committee. Procurement committee personnel are part of the institution that earns income following applicable regulations. Efforts to find additional income from procuring goods and services may function in various ways, including utilizing their position and authority. For example, Procurement Committee personnel manage the procurement process to win over one of the procurement participants by asking for a certain amount of money in return. Deviations initially only met the needs of a useful life because the income is still insufficient to cover daily needs can gradually worsen and lead to greed and greed. It is tracking research conducted by Nur Hidayati & J.M.V Mulyadi (2017), which shows an influence between the Procurement Committee's income and fraud. Therefore, it can indicate that the income of the procurement committee has a role in the fraud.
H5: Procurement Committee Income Affects Fraud 3. Research Method
This research was conducted from January to June 2021 by distributing questionnaires to a Regional Revenue Service. The population in this study is a Regional Revenue Service. The total population of the Regional Revenue Service is 235 people. Moreover, the samples were 50 treasury employees who procured goods/services. There was a sampling of only 50 respondents because the Regional Revenue Service only allowed a maximum sampling of up to 50. Due to the COVID-19 pandemic and the implementation of the WFH (Work From Home) work model, the number of respondents is limited. Of the distributed 50 questionnaires, returned 47, and only 45 were eligible to be processed.
Before discussing the results of this study, it will first explain the general description of the research respondents. It relates to the characteristics of the respondents, such as gender, age, education level, and years of service. These respondents will be explained further in the following demographic tables:
Table 2: Gender.
Gender Amount Percentage (%)
Male 20 44.44 %
Female 25 55.56 %
Total 45 100.00 %
Table 2 shows that male respondents dominate the sample proportion of as many as 20 people (44.44%) and female respondents as many as 25 (55.56%).
Table 3: Age.
Range Amount Percentage (%)
20-30 years 10 22.22 %
31-40 years 13 28.90 %
41-50 years 11 24.44 %
>50 years 11 24.44 %
Total 45 100.00 %
Based on table 3, it shows that from 45 respondents, the largest proportion of respondents aged 31 to 40 years were 13 people (28.90%), then respondents aged 41 to 50 years and over 50 years old were 11 people (24.44%), then 10 respondents aged 20 to 30 years (22.22%).
Table 4: Education
Education Amount Percentage (%)
Undergraduate 9 20.00 %
Graduate 21 46.67 %
Master 10 22.22 %
Doctoral 5 11.11 %
Total 45 100.00 %
Based on table 4 shows that the majority of respondents have a recent educational background of D4/S1, as many as 21 people (46.67%), while respondents with a postgraduate educational background are ten people (22.22%), respondents with a D3 educational background are nine people (20.0%) and 5 respondents (11.11%).
Table 5: Period of employment
Employment Period Amount Percentage (%)
< 5 years 8 17.78 %
5-10 years 12 26.67 %
11-15 years 10 22.22 %
>15 years 15 33.33 %
Total 45 100.00 %
Table 5 shows respondents with more than 15 years of service. They are more dominant (15 people or 33.33%) than respondents who have a service period of 5 to 10 years, 12 people (26.67%), respondents with a working period of 11 to 15 years. as many as ten people (22.22%), and respondents with a working period of fewer than five years as many as eight people (17.78%).
4. Results and Discussion
Table 6: Hypotheses testing Model
Standardized Coefficients
Beta
t Sig.
(Constant) 1,150 ,257
LN_Committee Quality ,447 3,302 ,002
LN_ICS ,347 2,477 ,018
LN_Procurement Environment ,003 ,015 ,988 LN_Procurement Ethics -,142 -,737 ,466 LN_Comiittee’s Income ,190 ,763 ,450
Adjusted R2 ,346
4.1. The effect of committee quality on fraud
As shown in the table above, the results of the study show that the Committee Quality variable affects fraud, with a significance value of 0.002, which is smaller than a significance value of 0.05 with a t-statistic value of 3.302 greater than t table 2.0226, so we can conclude that quality The committee affects fraud. The procurement committee is one of the parties involved in the procurement of goods and services that determines the bidding process for the procurement of goods and services. All activities and decisions taken by the Procurement Committee are very crucial because they deal directly with the interests of various other goods/services procurement subjects. The output of the procurement committee is the determination of suppliers of goods and services that will carry out the work and various agreements that will articulate in the work contract. In order to be able to carry out their duties properly, the procurement implementers must-have qualities that we can see from several dimensions, namely their integrity, competence, independence, and objectivity. If the procurement committee lacks integrity, independence, and objectivity, the procurement management becomes less qualified, creating opportunities for individuals or groups to behave fraudulently.
In addition, the professionalism or procurement committee quality is a factor that influences the procurement system's success in achieving the goals. The inability of personnel related to goods/services procurement activities is one of the causes of the non-functioning of the goods/services procurement system. For this reason, the ability and professionalism of the procurement committee are very influential on the occurrence of fraud in the procurement of goods and services. A good quality committee will encourage implementing a clean procurement process, free of corruption, collusion and nepotism.
Associated with the question indicators in the questionnaire answered by respondents on the Committee Quality variable, the indicator that obtained the highest total score indicated a special relationship between the goods/services provider and the procurement committee. Most respondents agree because respondents think that the quality of the committee generally depends on the background of a unique or intimate relationship between the provider of goods/services and the procurement committee. It can interfere with the quality of the committee, which will tend to ignore quality in the procurement process. It will prioritize unique relationships with providers
Meanwhile, the indicator of the lack of integrity of officials related to the procurement of goods/services got the lowest total score in the Committee Quality variable. It is because the respondents think that the integrity of the goods/services procurement committee at the company does not have a low/low level of integrity, so it is doubtful to affect the Quality of the Committee, which will cause the risk of fraud to occur.
This is also in line with what was stated by (Zulaikha and Paulus Th Basuki Hadiprajitno, 2016), (Ni Kadek Indah Permata Sari & I Wayan Suartana, 2020), (Nashirotun Nisa Nurhajanti, 2017), and (Nur Hidayati & J.M.V Mulyadi, 2017) which states that the quality of the committee affects fraud.
4.2. The effect of internal control system on fraud
The study results show that the Internal Control System variable affects fraud. The significance value is 0.018, which is smaller than a significance value of 0.05 with a t-statistic value of 2,477 greater than t-table 2.0226.
Hence, the Internal Control System affects fraud. According to article 3 of the Government Regulation of the Republic of Indonesia, Number 60 of 2008, the internal control system consists of elements of the control environment, risk assessment, control activities, information and communication and monitoring. The implementation of a good Internal Control System can suppress the occurrence of fraud. In the procurement of goods and services, the Internal Control System can be applied to start from procurement planning to the implementation of procurement so that these actions can reduce the potential for fraud in the procurement of goods/services. The internal control system is another aspect that determines the course of the procurement system.
ICS determines procurement's success according to its purpose because an excellent and easy-to-understand ICS will reduce the risk of misunderstandings so that the implementation of procurement continues under the provisions. The government is always trying to improve the internal control system to optimize the procurement system for the better, among others, by applying a system based on the latest technology, namely SPSE or the Electronic Procurement System, to limit the movements of fraud perpetrators.
Associated with the question indicators in the questionnaire answered by respondents on the Internal Control System variable, the indicator regarding indications of gaps or ineffectiveness of the ICS for the procurement of goods/services gets the highest total score. The respondents indicated the dominance of agreeing on these indicators because in assessing an Internal Control System, whether it was successful or not, it is necessary to know what gaps are causing the ineffectiveness of the ICS so that in the future, we can evaluate periodically. If the ICS is constantly evaluated and refined, it will reduce the risk of fraud.
Meanwhile, the indicator of the lack of implementation of healthy practices in the system and procedures for procuring goods and services received the lowest total score. It happens because respondents tend to disagree with these indicators. After all, respondents think that implementing healthy practices has been widely demonstrated in the company, so it is less relevant if the lack of healthy practices is one of the ICS indicators in influencing fraud actions. The results of this study are in line with (Nur Hidayati & J.M.V Mulyadi, 2017) and (Wawan Setiawan, Nasron Alfianto, and Willyanto Kartiko Kusumo, 2019) which state that the Internal Control System has an effect on Fraud.
4.3. The effect of procurement environment on fraud
The results in the study show that the Procurement Environment variable does not affect fraud, demonstrating a significance value of 0.988, which is greater than a significance value of 0.05 with a t-statistic of -0.015 less than t-table 2.0226, so the Procurement Environment does not affect this fraud. It shows that the existing environment for procuring goods/services has not influenced achieving the objectives due to the supervision absence during the procurement process or the pre-audit absence (setting the initial plan of the procurement process). The supervision functions after the procurement process evaluation. This condition will then make the procurement environment for goods/services not ideally controlled, and ultimately the procurement environment will not be able to influence the fraudulent procurement of goods/services.
The work environment is very complex with various factors, such as employee ethics, background, working conditions, et cetera. Exists in the work environment can be created or shaped by the work culture of the company's employees so that it cannot be an absolute reference to trigger fraud. So the environment cannot be a determining factor influencing fraud because, in various environmental conditions, fraudulent actions can still occur due to several complex factors that affect fraud.
Associated with the question indicators in the questionnaire answered by respondents on the Procurement Environment variable, the optimal implementation indicators related to the policies obtain the highest total score.
It is because respondents mostly follow opinions that agree with the implementation that has been carried out optimally in the company related to the policies so that the procurement environment has been built with discipline per existing policies so that it cannot influence the existence of fraudulent actions. In addition to these indicators, indicators related to location that is not a barrier to accessing information also get the same high total score.
Because respondents think that the procurement environment has good access to the acquisition of data and information needed in operations, nothing is complete to become a loophole for fraud.
Meanwhile, the indicator of the absence of intervention from other/external parties obtains the least total score.
It is because respondents mostly disagree. The results of this study are in line with (Nashirotun Nisa Nurhajanti, 2017) and (Ni Kadek Indah Permata Sari & I Wayan Suartana, 2020). They state that the Procurement Environment does not affect fraud. In reality, the procurement environment within the company does not have any intervention from other or external parties, so we cannot use these indicators as factors that influence fraudulent actions.
4.4. The effect of procurement ethics on fraud
The results in the study show that the Procurement Ethics variable does not affect fraud, with a significance value of 0.466, which is greater than a significance value of 0.05 with a t-statistic of -0.737 less than t-table 2.0226, so we can conclude that Procurement Ethics does not affect fraud. It shows that unethical behaviour (unethical) is challenging to understand, which depends on complex interactions between situations and the personal characteristics of the perpetrators. It shows that the committee is unaware of the ethical aspects of committing fraud. Therefore, it is essential to have a code of ethics related to ethics so that awareness of this ethical aspect appears in the practice of procurement of goods/services. In addition, another possibility is that ethics is not a decisive factor that determines the occurrence of fraud or not. Because even though ethics is low, the quality of the committee and its internal control system is high and sound so that we can prevent fraud.
To prevent fraud, the government/institution must create a code of ethics as a guide to behaving in a professional and accountable manner. The procurement committee must comply with the code of ethics. It is a tool of public trust that the committee can work professionally and be trusted even though the committee had bad ethics at first, as long as the applicable code of ethics regulated it to prevent fraud.
Associated with the question indicators in the questionnaire answered by respondents on the Procurement Committee Ethics variable, the indicator of perceived behaviour asking for rewards for passing procurement providers/participants is a common occurrence to get the highest total score. It is because respondents think that the Ethics of the Procurement Committee will tarnish if such behaviour occurs. Hence, the respondent believes this behaviour can effectively indicate ethical deviations among the procurement committee.
Respondents mostly disagree because carrying out administrative engineering had gone beyond many fatal things; the impact was more remarkable than just an ethical deviation. Meanwhile, indicators related to the behaviour that engineered administrative legality to expedite the fraud process, such as by making proof of a fake agreement, had the lowest total score. So that these indicators are considered less representative, they can indicate ethical deviations that cause fraud in procuring goods/services. This study's results align with (Nashirotun Nisa Nurhajanti, 2017), who states that procurement ethics does not affect fraud.
4.5. The effect of procurement committee income on fraud
The probability of fraud cannot be measured only by the level of income earned by the procurement committee.
The study results that the Procurement Committee Income variable does not affect fraud, with a significance value of 0.240, higher than a significance value of 0.05 with a t-statistic of 0.763 less than t-table 2.0226. So the Procurement Committee's Income does not affect fraud. These results can occur because the possibility of income received by the procurement committee cannot create conditions that do not abuse the position and authority they have. After all, even though the income received is high, if the quality of the committee is poor, then the shady character and abuse of office to get additional income will remain.
The results showed that the income of the procurement committee did not affect the occurrence of fraud due to conditions in Indonesia. Many committees still abused their authority even though they got additional fees for the procurement committee. So the amount of income timely received cannot look at grantee that a committee will avoid fraud.
Associated with the question indicator in the questionnaire answered by the respondent on the Procurement Committee Income variable, the indicator of fraud perpetrators having tactics to cover fraud formally obtains the highest total score. It is due to the opinion that respondents mostly agree with the opinion that this indication can occur if there is a committee that obtains additional income through fraud.
Meanwhile, the indicator that the procurement committee has a side job as an additional source of income has the lowest total score. It is because the respondents do not think that the procurement committee needs to earn additional income or are not sure whether there is a procurement committee that has a side job that acts as a trigger factor for fraud. The results of this study are in line with (Nur Hidayati & J.M.V Mulyadi's, 2017) results which show no effect between the Procurement Committee's income and fraud.
4.6. The relationship between the committee quality and the internal control system
The study results show that the quality of the committee with the internal control system affects fraud. These two variables are also related because if there is an established internal control, then the resources in the form of a quality procurement committee will be controlled. Because in the ICS, the committee's quality standards will be regulated to achieve the goals and quality performance results.
ICS will also protect the company from fraud committed by its employees and mistakes often made by incompetent or low-quality employees. In addition, the relationship between the Quality of the Committee and ICS can also be explained by the existence of a relationship if the committee is of high quality, it will be able to implement procedures and work systems optimally. So, the existing ICS can apply because the committee, the employee and the target object of the ICS can comply with the existing rules. So that the quality of the committee and ICS has a relationship in influencing fraud in a company because if ICS affects fraud, then the quality of the committee will also be guaranteed and can affect fraud, and vice versa.
4.7. The relationship between committee ethics, work environment, and procurement committee income
The results of the study show that the variables of Committee Ethics, Work Environment, and Income of the Procurement Committee do not affect fraud in a company. The three variables are related to each other, which causes the three of them not to be able to influence fraud. Committee Ethics and Income, The Procurement Committee is a part of a company's work environment. In the work environment, there are various employees, and different conditions, such as the ethics of one employee and another certainly cannot be equated, as well as different income factors.
In the case of fraud, the work environment cannot influence fraud because this factor cannot be used as an absolute reference to determine the presence of fraud. It can be an absolute reference because fraud exists in various working environment conditions. Even though a work environment is strict and disciplined, fraud still exists, so the work environment is an inaccurate variable to describe the possibility of fraud. Because of that, the work ethic and income of the committee, which are the factors that build the work environment, cannot be used as absolute references because they are the same as the work environment, which cannot be used as a reference.
5. Conclusions 5.1. Conclusions
This study aims to test and analyze the effect of the variables of Committee Quality, Internal Control System, Procurement Environment, Procurement Ethics, and Procurement Committee Income on Fraud. The sample in this study is a local Regional Revenue Service. There were 50 questionnaires distributed, but 47 returned (94.00
%), three non-returned questionnaires (6.00%), and two questionnaires that could not be processed because they did not meet the requirements (4.00%). So there are only 45 questionnaires (90.00%) that we can process as research samples. After doing the research, the data was obtained through several stages of multiple regression testing to test the hypothesis. The conclusion is as follows:
1. The quality of the committee affects fraud.
2. Internal Control System affects fraud.
3. The Procurement Environment does not affect fraud.
4. Procurement Ethics does not affect fraud.
5. Income of the Procurement Committee does not affect fraud.
5.2. Suggestions
Based on the processed research data, there were several weaknesses. So that the researcher has some input or suggestions for the company, including the following:
1. Regional Revenue Service should give more particular attention to the Quality of the Committee, Internal Control System, Procurement Environment, Procurement Ethics, and Procurement Committee Income as factors influencing fraud. It may support optimal work results and be free from fraud. The office can conduct periodic evaluations and training to control and improve the quality of the goods/services procurement committee and make KPIs (key performance indicators) and periodic assessments to study the quality of each good/service procurement HR. In addition, the Regional Revenue Office also needs to evaluate the implementation of the Internal Control System. If necessary, SOP and ICS tests are held for each HR to determine how each HR implements the understanding. It is also necessary to update the ICS if necessary so that it can constantly update according to the conditions of the existing work environment.
2. Regional Revenue Service should pay more attention to whether there is an indication of a special relationship between the procurement committee and the goods/services provider because this indicator is an indicator that serves as a benchmark indicating that the Committee Quality variable can influence the occurrence of fraud.
So it is hoped that management can regulate more stringently regarding the procedure for selecting goods/services providers to avoid a special relationship between providers and the committee.
3. Regional Revenue Service should pay more attention to any indications of gaps or ineffectiveness of the internal control system for the procurement of goods/services because these indicators serve as benchmarks that the Internal Control System variable can control fraud. So that management is expected to be able to evaluate the ICS owned periodically and its implementation within the company to ensure that the ICS can be applied effectively in procuring goods/services.
5.3. Research limitations
Based on the research, the researcher has limitations in the study, namely:
1. The use of data collection methods is still limited, namely only surveys through questionnaire media, so the various answers presented by respondents still cannot entirely reflect the actual conditions.
2. The value of the coefficient of determination (Adjusted R2) for the variables of Committee Quality, Internal Control System, Procurement Environment, Procurement Ethics, and Procurement Committee Income obtained from the research on the Regional Revenue Service is only 34.60%, where this figure including small.
3. There may be bias due to the subjectivity of research respondents.
4. Due to the COVID-19 pandemic, researchers experienced limitations in observing more closely related to the research object. The sample allowed to be used as a respondent is also only 50 people.
5.4. Research implications
Related to limitations found during the research, here are agenda for future research:
1. Add or replace several independent variables in further research so that it will expand the information generated.
2. We hope that further researchers can add more internal and external factors so that the independent variables studied are varied.
3. We hope that further researchers will extend the research period and expand the object and place of research.
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