Enhancing fraud prevention and internal control: the key role of internal audit in public sector governance

Abstract

This research aims to investigate the impact of the Internal Audit Function (IAF), Internal Control (IC), and Fraud Prevention (FP) on governance (GOV). Additionally, this study examines whether IC and FP mediate the relationship between the IAF and GOV. The testing was conducted in the local government environment in Indonesia, involving 117 respondents from the internal supervisory apparatus of the Indonesian government, all of whom were members of the Association of Indonesian Government Internal Auditors (AIGIA). Data were collected using questionnaires distributed on social media platforms. The data analysis employed a Structural Equation Model (SEM) using Partial Least Squares (PLS). The findings of this research reveal the following: (1) The IAF has a positive impact on IC and GOV. (2) FP has a positive impact on GOV. (3) IC does not affect GOV. (4) IC is unable to mediate the relationship between the IAF and GOV, while FP can effectively mediate this relationship.

Keywords

• Internal audit function
• internal control
• fraud prevention
• governance
• public sector accounting
• M41