The Consequence of Whistleblowing System and Internal Control toward Fraud Prevention: A Study on Indonesian State
Owned Enterprise
Dwi Puryati1*, Sonia Febriani1
1 School of Business Ekuitas, Bandung, Indonesia
*Corresponding Author: [email protected] Accepted: 15 September 2020 | Published: 30 September 2020
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Abstract: This research aims to analyze the influence of whistleblowing systems and internal control on fraud prevention on Indonesian State Owned Enterprise (SOEs). This study uses whistleblowing system and internal control as independent variables, while fraud prevention as the dependent variable. Population in this research is employed who were the internal audit, whistleblower, and other department related to fraud in SOEs Indonesia. The researcher used Solvin’s method of determining sample size. There were 62 respondents sampled out of a population of 122. Furthermore, the data were analyzed utilizing multiple regressions. The results show that the application of the whistleblowing system, internal control and fraud prevention at Indonesian SOEs is in a reasonably good category. And the whistleblowing system and internal control possess significant effects on fraud prevention. It indicates that performing fraud can be prevented by establishing a reliable internal control and increasing whistleblowing system to all parties in the organization.
Keywords: Whistleblowing, Internal Control, Fraud Prevention
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1. Introduction
Fraud is an intentional strategy by person to achieve a personal or organizational goal or human needs by deception. Layman's (2019) states that fraud includes dishonesty in the form of delirated fraud, misrepresentation of a material fact, lying, deliberate submission of untruth, and the gaining of an unfair advantage. Fraud involves foercing people to act against their own best interests. Three factors that encourage someone to commit fraud are identified as the fraud triangle, specifically pressure, opportunity, and rationalization (Arens et al., 2017).
The Association of Certified Fraud Examiners (2020), conducted an 11 year study of the impact occupational fraud has on organizations worldwide. The study analyzed 2,504 cases of occupational fraud that were investigated between January 2018 and September 2019The most form of fraud is financial fraud committed by individuals against the organizations where they work. The results of the ACFE study suggest that more than 3.3 billion people in the global workforce, and nearly all of them have access or control over a portion of their employer's cash or assets. However a small proportion that can cause trillions dollars in losses each year.
In Indonesia, fraud cases still often occur in various companies, either private companies or state/regional owned companies. Research results from the Association of Certified Fraud
Examiners (ACFE) Global show that every year, 5% of organizational income in Indonesia is a victim of fraud (www.acfe- Indonesia.or.id, 2019). Below will be presented the results of the latest 2019 Indonesian Fraud Survey (SFI) conducted by the ACFE Indonesian Chapter based on the following categories:
Figure 1: Most Types of Fraud in Indonesian Source: ACFE Indonesian Chapter 2019
Figure 1 shows that the most common fraud occurring in Indonesia is corruption, followed by misuse of assets and misuse of financial statements. Below will be presented the results of the 2019 Indonesian Fraud Survey (SFI) conducted by the ACFE Indonesian Chapter based on the following categories:
Figure 2: Organizations/institutions that suffer losses due to fraud in Indonesia Source: ACFE Indonesian Chapter 2019
Based on Figure 2 above, the results of the survey conducted by the ACFE Indonesia Chapter show the most disadvantaged organizations/institutions in this study, particularly the government by 48.5%, and state companies/SOEs by 31.8%. In SOEs, there are many cases of fraud, misuse of assets, and corruption.
Fraud prevention can be executed through internal control mechanisms. ACFE Indonesian Chapter states that internal control weaknesses are a factor in the company's occurrence of fraud. The effectiveness of the internal control system that design by management with the objective of increasing the reliability of financial reporting, efficiency and effectiveness of operations, and compliance with law and regulations (Arens et al., 2017). According to Eko Uket and Joseph Offong (2012), efficient and effective internal control is necessitated to prevent fraud. Weak internal control will encourage fraud to be committed. Inadequate supervision and improper documentation process provide an opportunity to misuse of assets.
This fraud will have more impact if it involves several people that cooperate in conducting those illegal malpractices (Mizan, Khairul, et, al., 2016). Internal control is crucial in detecting any financial fraud that begets the risk of harming the company (Susanto, 2014:
93).
Another effort to increase the effectiveness of fraud prevention is implementing a whistleblowing system (a system for reporting suspected violations). The ACFE Indonesian Chapter (2019) survey shows that the hotline/whistleblowing system method is still a relatively effective means of preventing fraud with a percentage of 22.6% accompanied by consistent implementation of anti-fraud policies in organizations of 13.8%. The fraud committed by large companies and has been exposed has caused the the whistleblowing system to become the world’s attention today (Dapit, Imang Pamungkas, et al., 2017). The whistleblowing system is a system with a formal purpose from each company to secure and control sensitive information. If the sensitive information is to be disclosed to legal authorities or third parties, it could endanger the company's interests (Brown et al., 2014:
341). The purpose of this violation reporting system is to reveal acts of violation or disclosure of acts that violate the law, unethical or immoral actions or other actions that can harm the organization or stakeholders, which are committed by employees or organizational leaders to the leaders of other organizations or institutions that can exert action for these violations (Semendawai et al., 2015: 70).
Several previous studies related to this research have been conducted by Mirinaviciene (2014), Mizan Khairul et al. (2016), Eko Uket, et al. (2012), Nawawi Anuar, et al. (2016) show that internal control affects fraud prevention. Moreover, research by Abrecht et al.
(2018), Lee Gladys and Neil Fargher (2013), Ndege Oguda et al. (2015), Dapit Imang, et al.
(2017), Atmadja A.T, et al. (2019), Latan Hengky, et al. (2019) show that the whistleblowing system affects fraud prevention.
This study will analyze the application of the whistleblowing system, internal control, and fraud prevention in SOEs in Indonesia and the effect of the whistleblowing system and internal controls on fraud prevention in SOEs in Indonesia.
2. Literature Review
2.1. Fraud Prevention
Redding et al. (2014: 8) defined fraud is an acts or negligences designed to deceive others.
The result of fraud is suffering a loss and the perpetrator will get an advantage or gains.
Meanwhile, AICPA (2003) defined fraud "is an act that results in material misstatement in the financial statements that is the subject of an audit" (AICPA, 2003). There are two actions that can lead a material misstatement could occur concerning fraud : misappropriation of assets and fraudulent financial. Misappropriation of assets is the deliberate misuse of company assets for personal gain, usually often carried out by employees or employees such as embezzlement of cash, use of facilities for personal gain, and so on. Fraud in financial statements or fradulent financial reporting is a misstatement or deliberate omission of amounts and disclosures with the intention of deceiving users of the report, usually often done by management. For example, overstating assets, understating liabilities (AICPA, 2003). Goldmann, Peter (2010:23) states that three factors that are present in every situation of fraud , know as the fraud triangle : (1) motive or pressure : there is the existence of an incentive or pressure or need to commit fraud. Financial stability, external pressure, personal financial need, and financial targets are four types or conditions in pressure that can lead to
fraud. (2) opportunity- the need for committing fraud: there is a situation that gives someone the opportunity to occur fraud. Fraud is usually occurs because of weakness internal company controls, lack of supervision and abuse of authority. Opportunity to be minimized through the application of processes, procedures, and efforts to detect early fraud against. (3) rationalization - the existence of attitudes, characters, or a series of ethical values that allow certain parties to commit acts of fraud, or people who are in a sufficiently oppressive environment that makes them rationalize fraud. The fraud triangle is a basic theory which later developed into the newest approach is fraud diamond. Fraud diamond is a new perspective on the phenomenon of fraud. Fraud diamond is a refinement of the fraud triangle by adding one element is capability. Many frauds, which are generally large numbers, will not be possible if there is no certain person with special capability in the company.
2.2. Whistleblowing System
According to Brown et al. (2014: 341), the whistleblowing system is "The prime objective of any corporate whistleblowing system is to secure and control potentially sensitive information that, if disclosed to legal authorities or to third parties, could endanger the company's interest.” The National Governance Policy (2019: 22) states that the effectiveness of the reinforcement of the whistleblowing system depends on (1) the conditions that make employees who witness or know of a violation want to report it, (2) the company's attitude towards retaliation that may be experienced by whistleblowers, and (3) ) The possibility of providing access to reporting violations outside the company if management does not get an appropriate response. The whistleblowing system is one strategy to reduce fraud. The public community is given the opportunity to use the whistleblowing system as a preventive strategy to prevent fund fraud. In its implementation, there are obstacles and challenges that must be immediately sought for solutions. With the implementation of the effective whistleblowing system, the fraudsters will rethink whether to perpetuate the fraud or discontinue the behavior. (Dapit, Imang P, et al., 2017). Previous research results from Abrecht et al. (2018), Lee Gladys and Neil Fargher (2013), Ndege Oguda et al. (2015), Dapit Imang, et al. (2017), Atmadja A.T, et al. (2019), Latan Hengky, et al. (2019) show that the whistleblowing system affects fraud prevention.
Hypothesis 1: Whistleblowing system affects the prevention of fraud 2.3. Internal control
According to the Committee of Sponsoring Organizations of The Tradeway Commission (COSO) in Redding et al. (2014: 6), internal control is as follows:
“A process that is influenced by the board of commissioners, management personnel, and other business units designed to provide reasonable assurance regarding the achievement of objectives which include operational effectiveness and efficiency, reliability of financial reports, conformity with laws and regulations”.
According to the COSO in Redding et al. (2014: 9) states that the internal control component consists of:
1) Control Environment
Consists of a set a set of standards, processes, and structures that provide the basis for implementing internal control throughout the organization.
2) Risk Assessment
All companies will encounter risks that can threaten the achievement of company goals.
All risks, both internal risks and external risks, must be assessed. COSO states that every
company faces a variety of risks that come from within and from outside. Risk is defined as the likelihood that an event will arise and affect the achievement of goals.
3) Control Activities
Control activities are established through by policies and procedures that help ensure that management to reduce risks to achieve company objectives. Control activities are exercised at all levels of the entity, at various stages in the business process, and over the technological environment.
4) Information and Communication
High-quality information must be communicated appropriately. Relevant, accurate, and timely information must be made available to individuals at all levels in an organization who needs the necessary information to conduct their business effectively. The information must be made available to specific parties to support operational achievement, reporting, and compliance. Also, communication must take place broadly in terms of achievements, responsibilities of each individual or group, and other essential matters.
5) Monitoring
Monitoring activities is an evaluation activity that is ongoing, separate or a combination of the two used to ensure that the five components of internal control affect the functions of each component. The findings will be evaluated and deficiencies found communicated to management and the board of directors.
The implementation of efficient and effective internal controls can prevent fraud; this is reinforced by the results of previous studies conducted by Mirinaviciene (2014), Mizan Khairul et al. (2016), Eko Uket, et al. (2012), Nawawi Anuar, et al. (2016) which show that internal control affects fraud prevention.
Hypothesis 2: Internal control affects fraud prevention.
This research framework can be illustrated in Figure 3.
Figure 3: Framework Internal Control (X2)
1. Control environment 2. Risk assessment 3. Control activities
4. Information and communication 5. Monitoring
(COSO in Redding et al., 2014:346)
Fraud Prevention (Y) 1. To institute an excellent internal control structure 2. To enact effective control
activities
3. To improve organizational culture
4. To Establish effective internal audit function (Priantara, 2014:196) Whistleblowing System (X1)
1. Conditions that make employees who witness or identify a violation want to report it
2. The company's attitude towards retaliation that may be experienced by whistleblowers
3. Availability of access to reporting violations outside the company, if management does not acquire an appropriate response
(The National Governance Policy, 2019:22)
3. Discussion and Conclusion
3.1. Research Methodology
Research Design is a descriptive and verificatife method. Descriptive method is used to describe the variables whistleblowing system, internal control, and fraud prevention on Indonesian State Own Enterprise. And the verification method is to test the effect of the independent variable on the dependent variable. The Study Area was conducted in Bandung, West Java, Indonesia. Population in this research is employed to select the key informants who were the internal audit, whistleblower, and other department related to fraud in Indonesian SOE’s. The optimum sample size determined used the Solvin’s method. There were 62 respondents obtain from a population of 122. Data analysis utilized regression analysis.
3.2. Respondent Data
Descriptions of respondent profiles consisting of gender, age, education level, and duration of work are presented in the following table.
Table 1: Classification of Respondents Based on Gender
Gender Frequency Percentage
Male 44 70,97 %
Female 18 29,03 %
Total 62 100 %
Source: Processed data
Table 2: Respondent Groups Based on Age
Age Frequency Percentage
< 25 years 8 12,90 %
25-35 years 14 22,58 %
36-46 years 24 38,71 %
46-55 years 10 16,13 %
56 years 6 9,68 %
Total 62 100 %
Source: Processed data
Table 3: Respondent Group Based on Education Level
Age Frequency Percentage
Diploma 18 29,03 %
Undergraduate 28 45,16 %
Postgraduate 16 25,81 %
Master 0 0,00 %
Total 62 100 %
Source: Processed data
Table 4: Respondent Group Based on Period of Work
Age Frequency Percentage
1-5 years 8 12,90 %
6-10 years 10 16,13 %
11-15 years 30 48,39 %
>15 years 14 22,58 %
62 100 %
Source: Processed data
3.3. Validity Test and Reliability Test
Validity testing aims to determine whether the statements that have been applied in the questionnaire can measure existing variables. This validity test is accomplished by correlating the score of the respondent's answer to each question. The value of r count is compared with r table if r count > r table it can be concluded that the data is valid. Based on the validity test conducted on the questionnaire questions, the following results were obtained:
Table 5: Validity Test Results
Variable Number of Questions The value of r count
Whistleblowing system 9 0,864-0,973
Internal Control 16 0,851-0,988
Fraud Prevention 15 0,866-0,966
Source: SPSS Output Results
Based on table 5, it can be concluded that all statements in the questionnaire of this study fit the validity test given that the value of r count > r table.
Objective of the reliability test is measure the stability and consistency of respondents in answering matters relating to questions that are variable and arranged in one questionnaire form. Reliability tests can be performed collectively on all question items for more than one variable. The results of the reliability test are as follows:
Table 6: Reliability Test Results
Variable Reliability Statistics
Cronbach’s Alpha N of Items
Whistleblowing System 0,987 9
Internal Control 0,995 16
Fraud Prevention 0,989 15
Source: SPSS Output Results
From the table above, the value of Variable Reliability is higher than r (0.70). Therefore all variables have fitted the criteria of being reliable.
3.4. Overview of the Whistleblowing System, Internal Control and Fraud Prevention at SOEs in Indonesia
In this study, the whistleblowing system variable was measured using 9 statement items which were divided into three indicators, specifically condition indicators that proffer employees who witness or identify concerning a violation to voluntary to report it consisting of 5 statements, indicators of company attitudes towards the impact that may be experienced
by whistleblowers consisted of 2 statements. Indicators of the access's availability to reporting violations to the external of the company; if management does not get a proper response, it consists of 2 statements. Based on the results of research on the whistleblowing system, it reveals that the total value of the actual score obtained from all the statements that generate the whistleblowing system variable was 909 from the ideal score of 1395, or the total percentage obtained was 65.16%; this shows that the whistleblowing system applied to Indonesian SOEs is in the considerably good category. Of the three whistleblowing system indicators, it shows that the condition indicators that offer employees who witness or identify concerning violations willing to report it and indicators of the availability of access to reporting violations to the external party of the company, if management does not get a proper response, shows the lowest mean score below the average value when compared with the indicator of the company's attitude towards the impact that the whistleblower might experience; this means that even though the whistleblowing system is categorized as considerably good, it still shows weaknesses in the whistleblowing system and requires improvement.
Internal control variables were measured using 16 statement items divided into five indicators, particularly control environment indicators consisting of 3 statements, risk assessment indicators consisting of 3 statements, control activity indicators consisting of 5 statements, information and communication indicators consisting of 2 statements, and monitoring indicators consisting of 3 statements. The results show that the actual total score obtained from all the statements that generate the internal control variable was 1613, and the ideal score was 2480 or 65.04%; this shows that the internal control exercised by Indonesian SOEs is the moderately good category. The research results on risk assessment indicators, control activity indicators, and monitoring indicators show the lowest mean score below the average mean score when compared to the control environment indicators and information and communication indicators; therefore, there is still a need for improvement.
The fraud prevention variable was measured using 15 statement items which were divided into four indicators, specifical indicators of establishing an excellent internal control structure consisting of 5 statements, indicators of constructing effective control activities which consist of 2 statements, indicators of improving organizational culture consisting of 5 statements, and indicators of effective internal audit function which consists of 3 statements. Furthermore, the fraud prevention research results show that the actual total score obtained from all the statements that generate the fraud prevention variable was 1551, and the ideal score was 2325 or 66.71%; this shows that the prevention of fraud committed by SOEs in Indonesia is in a considerably good category. Indicators of effective control activities and indicators of internal audit functions display the lowest mean score below the average mean score when compared with establishing a good internal control structure and indicators of improving organizational culture.
3.5. Classic assumption test
The classic assumption test results consisting of a normality test, multicollinearity test, and heteroscedasticity were all met with the following explanation:
1) The normality test using the Kolmogorov Smirnov in table 7 gives a significance value of 0.517; greater than 0.05, it can be concluded that it is normally distributed.
Table 7: The Normality Test Result One-Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 62
Normal Parameters Mean 0
Std. Deviation 608.7725533
Most Extreme Differences Absolute 0.093
Positive 0.093
Negative -0.077
Kolmogorov-Smirnov 0.517
Asymp. Sig. (2-tailed) 0.952
Source: SPSS Output Results
2) Based on table 8, the independent variable's tolerance value is more significant than 0.1, and the VIF value is less than 10. Therefore it is concluded that there is no multicollinearity between the independent variables in the regression model.
Table 8: Multicollinearity Test Result Model Collinearity Statistics
Tolerance VIF Constant:
Whistleblowing System 0.676 1.478
Internal Control 0.676 1.478
Source: SPSS Output Results
3) From the results of the scatter plot test , it can be observed that there is no clear pattern, and the points spread between below 0 to above 0 on the Y-axis. It can be concluded that there is no heteroscedasticity in the regression model.
3.6. Multiple Linear Regression Analysis
Below will be presented a regression equation model using multiple linear regression analysis, which is as follows:
Table 9: Multiple Linear Regression
Model Unstandardized Coeffecients Standardized Coeffecients
B Std. Error Beta
Constant 494.302 358.622
Whistleblowing System 0.432 0.155 0.442
Internal Control 0.364 0.152 0.378
Source: SPSS Output Results
The regression equation model formed based on the research results is:
Y = 494,302 + 0,432 X1 + 0,364 X2 + e From the regression model, it can be explained:
1) The constant value is 494.302, meaning that if the independent variables, particularly the whistleblowing system and internal control variables, are considered constant (value is 0), then the dependent variable, specifically the fraud prevention variable, will be worth 494.302.
2) The regression coefficient value of the whistleblowing system variable is 0.432, implying that the whistleblowing system variable has increased by (one) unit. In contrast, the other independent variables, particularly the internal control variable, are considered constant
(value is 0), the dependent variable, particularly the fraud prevention variable, will increase amounting to 0.432.
3) The regression coefficient value of the internal control variable shows 0.364, implying that if the internal control variable has increased by (one) unit, while the other independent variables, particularly the whistleblowing system variable is considered constant (value is 0), the dependent variable, particularly the fraud prevention variable, will increase, amounted to 0.364.
3.7. Analysis of Correlation and Determination Coefficients
Table 10: Correlation and Determination Coefficient
Model R R Square Adjusted R Square
1 0.727 0.528 0.495
Source: SPSS Output Results
Based on the table 10 above, it shows that the R-value is 0.727, which signifies that there is a correlation between the independent variable and the dependent variable of 72.70%.
Furthermore, the R2 value is 0.528, which implies that the variability of the dependent variable, particularly the prevention of fraud, which can be explained by the independent variable, particularly the whistleblowing system and internal control variables in this study is 52.8%. In comparison, the remaining 47.2% is explained by other variables outside the research model.
3.8. Hypothesis Testing
3.8.1. Simultaneous Hypothesis Testing (F Test)
The F test is a model of feasibility test (goodness of fit) that must be performed in linear regression analysis. Below will be presented the results of simultaneous hypothesis testing, which are as follows:
Table 11: Simultaneous Hypothesis Testing ANOVA
Model Sum of Squares df Mean Square F Sig.
Regression 12447874.1 2 6223937.03 15.674 .000
Residual 11118120.6 58 397075.737
Total 23565994.7 60
Source: SPSS Output Results
Based on the hypothesis testing (f test) in table 11 above, the simultaneous significance value of the regression model is 0,000; this value is smaller than the significance level of 0.05 (5%). Also, it can be observed from the results of the comparison between f-count and f- table, which shows the value of f-count by 15.674 while the F-table is 3.34. From these results, it can be noticed that f-count > f-table that is 15.674 > 3.34, it can be concluded that Ho is rejected, implying that simultaneously the whistleblowing system and internal control variables have a significant effect on the fraud prevention variable.
This study's results are supported by a theoretical basis that states that fraud prevention is eliminating possibilities or opportunities to commit fraud by developing and implementing risk management (especially fraud risk management), internal control, and honest corporate governance (Priantara, 2014: 184). One way to prevent fraud triangle is by creating a whistleblowing system, which is a guideline for employees or other bodies to be able to complain concerning symptoms of fraud (Setianto et al., 2014: 15).
The results of this study are in line with the results of previous studies conducted by Wardana et al. (2017), Ariastini et al. (2017), and Widiyarta et al. (2017). The results of that research indicate that the whistleblowing system and internal controls affect fraud prevention.
3.8.2. Partial Hypothesis Testing (t-test)
This test aims to present how considerably the influence of one independent variable individually in explaining the dependent variable; this can be observed from the significant value of t the calculation results. If the probability value < significant level (0.05), then the independent variable individually affects the dependent variable. Conversely, if the probability value > significant level (0.05), then the independent variable individually does not affect the dependent variable. Below will be presented the results of partial hypothesis testing utilizing multiple linear regression analysis, as follows:
Table 12: Partial Hypothesis Testing
Model Unstandardized Coeffecients Standardized Coeffecients
t Sig.
B Std. Error Beta
Constant 494.302 358.622 1.378 0.179
Whistleblowing System 0.432 0.155 0.442 2.798 0.009
Internal Control 0.364 0.152 0.378 2.398 0.023
Source: SPSS Output Results
Based on table 12, the partial testing results are as follows:
1) The significance value of the whistleblowing system variable amounting to 0.009 < 0.05.
It can also be observed from the comparison between t-count and t-table, which shows the t-count amounting to 2.798, while the t-table is 2.048. From these results, it can be noticed that t-count > t-table, that is 2.798 > 2.048, it can be concluded that Ho is rejected, implying that partially the whistleblowing system variable has a significant effect on fraud prevention.
2) The significance value of the internal control variable is 0.006 < 0.05 (the real level of research significance). Also, it can be noticed from the comparison between t-count and t- table, which shows the t-count amounting to 2.398, while the t-table value is 2.048. From these results, it can be recognized that the t-count > t-table is 2.398> 2.048. It can be concluded that Ho is rejected, suggesting that partially the internal control variable has a significant effect on the fraud prevention variable.
The research results note that the whistleblowing system has a significant effect on fraud prevention. Whistleblowing is a form of disclosure of violations or disclosure of actions that are against the law, unethical or immoral actions, or other actions that can harm the organization or stakeholders, committed by employees or organizational leaders to the leaders of other organizations or institutions who can exercise action for the violations. This disclosure is generally performed in secret (National Committee for Governance Policy, 2019: 3). One way to prevent fraud triangle is by creating a whistleblowing system, which is a guideline for employees or other people to be able to complain concerning symptoms of fraud (Setianto et al., 2014: 15). The results of this study are in line with the results of previous studies conducted by Abrecht et al. (2018), Lee Gladys and Neil Fargher (2013), Ndege Oguda et al. (2015), Dapit Imang, et al. (2017), Atmadja A.T, et al. (2019), Latan Hengky, et al. (2019) which shows that the whistleblowing system affects fraud prevention.
Based on the research results, it shows that internal control has a significant effect on fraud prevention. Internal control is a process that is designed, implemented, and maintained by those charged with governance, management, and other personnel to provide adequate
assurance regarding the achievement of an entity's objectives relating to the reliability of financial statements, operating efficiency and effectiveness, and compliance with laws and legislation (Agoes, 2017: 162). The correlation between internal control and fraud in a company is closely related. Defrauding is always a complex issue. A good internal control system, one of which aims to make organizational activities effective and efficient (Tugiman, 2014: 12). The results of this study support the results of previous studies conducted by Mirinaviciene (2014), Mizan Khairul, et al. (2016), Eko Uket, et al. (2012), Nawawi Anuar, et al. (2016) Wardana et al. (2017), Ariastini et al. (2017), Widiyarta et al. (2017), Zarlis (2018) , Sukadwilinda and Ratnawati (2013), Surfiani and Triandi (2015), and Albrecht et al.
(2018) which state that internal control affects fraud prevention.
3.9 Conclusion
Based on the results of research and discussion, the following concludes:
1) That the application of the whistleblowing system, internal control, and fraud prevention at Indonesian SOEs is in a reasonably good category. However, there are still several indicators that need to be improved.
2) Whistleblowing system and internal control simultaneously and partially have a significant effect on fraud prevention in Indonesian SOEs in a positive direction. The higher the application of the whistleblowing system and internal control system, the higher the fraud prevention.
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