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Determinant of Fraud and Unethical Behavior as Intervening Variable on Local Government in Indonesia

Author

Listed:
  • Amirah Andika Rifdayanti

    (Sriwijaya University, Palembang, Indonesia)

  • Tertiarto Wahyudi

    (Sriwijaya University, Palembang, Indonesia)

  • Yusnaini Yusnaini

    (Sriwijaya University, Palembang, Indonesia)

Abstract

Among all sectors, the government sector is in second place by the number of frauds. According to the Global Corruption Barometer (2020), Indonesia ranks third in terms of corruption among Asian countries. The purpose of this study is to determine the factors influencing fraud with unethical behavior as intervening variable on local government in Indonesia. Palembang City was included in 14 cities that contributed State Civil Apparatus involved fraud case in Indonesia. Therefore the sample in this study was 165 State Civil Apparatus with a minimum position as financial management staff from 33 Palembang City Government Offices. Data for the study were collected by online questionnaire. For data processing and analysis the author used Smart PLS – software with graphical user interface for variance-based structural equation modeling using the partial least squares path modeling method. The study results show that internal control, compensation suitability, moral reasoning and religiosity had an effect on fraud with unethical behavior as an intervening variable. Internal control is very important to provide protection for agencies against human weakness and to minimize the possibility of errors and actions that are not in accordance with the rules. Proportional compensation can lead to satisfaction with the commission received. Thus, it reduces unethical behavior. An individual's moral reasoning is one of the factors leading to ethical and unethical behavior. Individuals who have a better moral understanding will obey all applicable rules and policies so as to avoid unethical behavior. The level of a person's religiosity can determine a person's behavior because individuals who have a high level of religiosity will obey the values or rules that have been established by their religion. Individuals who have better religious values will find it easier to avoid and overcome fraud.

Suggested Citation

  • Amirah Andika Rifdayanti & Tertiarto Wahyudi & Yusnaini Yusnaini, 2020. "Determinant of Fraud and Unethical Behavior as Intervening Variable on Local Government in Indonesia," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 130-143, December.
    • Handle: RePEc:iaf:journl:y:2020:i:4:p:130-143
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    References listed on IDEAS

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    1. Steven Dellaportas, 2013. "Conversations with inmate accountants: Motivation, opportunity and the fraud triangle," Accounting Forum, Taylor & Francis Journals, vol. 37(1), pages 29-39, March.
    2. Dekar Urumsah & Aditya Pandu Wicaksono & Adhetra Januar Putra Pratama, 2016. "Melihat jauh ke dalam: Dampak kecerdasan spiritual terhadap niat melakukan kecurangan," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 20(1), pages 48-55.
    3. Dellaportas, Steven, 2013. "Conversations with inmate accountants: Motivation, opportunity and the fraud triangle," Accounting forum, Elsevier, vol. 37(1), pages 29-39.
    4. Dekar Urumsah & Aditya Pandu Wicaksono & Adhetra Januar Putra Pratama, 2016. "Melihat Jauh Ke Dalam: Dampak Kecerdasan Spiritual Terhadap Niat Melakukan Kecurangan," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 20(1), pages 48-55, Juni.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    fraud; internal control; appropriateness of compensation; moral reasoning; religiosity; unethical behavior;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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