Fraudulent Detection Model in Local Government

Abstract

Fraud level in central government’s institutions/ministries and local governments in Indonesia is relatively high. This is proven by the increasing number of government officials who become suspects in corruption and bribery cases. Based on this phenomenon, the researcher conducted a research with purposes to analyze fraudulent detection models specific for local government. Population for this study consists of employees and leaders involved in managing regional financial process. The unit of analysis is budget users, treasurers, officials of financial administration in each regional organization agency. The analytical method for this study uses the explanatory survey analysis, and data is analyzed using Smart PLS application. The study result is expected to create a fraudulent detection model. The study results show that leadership commitment influences the success of risk management implementation in the local government. Meanwhile the quality of human resources has no significant influences on the success of risk management. Based on interviews results with respondents, the responses show that top management commitment is the upmost important in implementing risk management. In their view committed management will support those employees who has limited understanding on risk management to get opportunity for training on the same. The study results also show that fraud could be prevented if the government has implemented risk management. Further, research is conducted using the following variables: role of internal auditor function, top management commitment, policy framework, training and communication processes.