THE ROLE OF INTERNAL CONTROL SYSTEMS AND GOOD
CORPORATE GOVERNANCE IN FRAUD PREVENTION EFFORTS
Introduction
Financial statement fraud has developed in various countries including United States,
along with growing business complexity and increasing investment opportunities
(Ramadhany, 2017). Business people try to present financial reports that can convince
investors to invest in their business. The 2019 United States Fraud Survey conducted by the
Association of Certified Fraud Examiners (ACFE) stated that there were 239 fraud cases that
occurred in United States and 22 of them were financial statement fraud. The type of fraud
that contributed the highest state losses was corruption with a total loss of IDR
373,650,000,000 (69.9%), misuse of assets IDR 257,520,000,000 (20.9%), and financial
statement fraud cases IDR 242,260,000,000 (9.2%). The survey conducted by ACFE also
shows that the most common media for disclosing fraud are financial reports (38.9%) and
internal audits (23.4%) (ACFE United States, 2020). Based on ACFE in Tuanakotta, (2010)
classifies fraud actions in three types, which are called the fraud tree,
The biggest scandal in the world related to accounting fraud practices was committed by
Enron by reporting false income information and modifying the balance sheet in order to
obtain a good assessment of financial achievement. In United States, fraud cases were also
carried out by various types of companies, including those by PT KAI in 2006 by
manipulating financial statement data, in 2001 PT Kimia Farma made profit engineering, PT
Garuda United States in 2019 recorded improper profits, Jiwasraya which manipulated
financial statements, PT Indofarma in 2004 violated and capital market regulations, and PT
Hanson Internasional in 2016 made full revenue recognition which caused overstated
financial statements (reported by CNBC United States on June 5, 2022).
Fraud prevention and detection is the primary responsibility of two parties, namely those
who have responsibility for the management and management of the company. The
obligation of management is to emphasize fraud prevention to reduce opportunities for fraud
and prevention, accompanied by supervision from those responsible for governance. High
commitment is needed to form a culture of honesty and ethical behavior under the active
supervision of those who have responsibility for the management of the company (IAPI,
2014).
One of the organization's efforts to prevent fraud is through the creation of a structured
and clear internal control system. Based on Mulyadi (2014) in Arifudin et al. (2020) The
Internal Control System (SPI) consists of an arrangement of organizations, steps, and means
that are mutually coordinated to protect the continuity of the organization. Pujiono (2016) in
Arifudin et al. (2020) explains that the purpose of internal control is to achieve company
goals, minimize potential unplanned events, increase efficiency, prevent asset losses, increase
the reliability of financial reporting data, and encourage compliance with established laws
and regulations. Nelaz et al. (2018) explain that SPI can ensure the implementation of
effective and efficient company operations and compliance with internal company regulations
related to external regulations so that accountability can be created. When matters related to
the organization are regulated in the internal control system, the organization's activities will
take place according to predetermined standards and avoid errors.
In addition, Good Corporate Governance (GCG) also plays an important role in the efforts
of the government overcome the occurrence of fraud. Tunggal (2012) in Adiko & Astuty
(2019) argues that there is good company management to prevent fraud, including building a
culture of honesty and good morals, management obligations in assessing fraud prevention,
and monitoring from the audit committee. Adiko & Astuty (2019) explain that GCG is a
process and structure that is useful for increasing business achievement and corporate
accountability in carrying out or adding long-term company value by protecting the needs of
stakeholders in accordance with laws and regulations, morality, and ethics. Based on the
Regulation of the Minister of BUMN No. PER-01 / MBU / 2011, the principles of GCG
include transparency, independence, accountability, responsibility, and fairness.
Based on data obtained from the ACFE United States survey (2020) related to the
alarming number of fraud incidents in United States. Research was conducted to provide an
explanation of the role of the internal control system and Good Corporate Governance as an
effort to prevent fraud. By understanding the objectives, functions, and components of SPI
and GCG and their relationship with fraud, it is hoped that all companies will be able to apply
internal control and good company management to prevent and minimize fraud in order to
create a healthy company.
Agency theory is a representation of the leading fundamental theory, agency theory is the
dominant theory that affects the structure of Corporate Governance, and attracts a lot of
research on Corporate Governance (Haronet al., 2020 in Hazzaa et al., 2022). Based on
agency theory, three corporate problems or issues are identified. These include the effort
problem (focusing on whether managers make efforts to manage the company to maximize
shareholder wealth), the differential risk problem (concerns about the different views of
managers and principals), and the asset situation (concerns about insiders controlling
company assets) (Patrick et al., 2015 Hazzaa et al., 2022). In agency theory, management is
described as the agent and shareholders are described as the principal. The agent is the party
that the principal trusts to make the best decisions for shareholders (Wardoyo et al., 2022).
The emergence of this agency theory is a result of the principal's inability to manage the
company or related agencies. So that the principal makes a contract with the agent to provide
services for the benefit of the principal. It's just that the agent has more information about the
company's future opportunities than the principal (Muna & Haris, 2018).
The American Institute of Certified Public Accountant (AICPA) (2009) describes that
internal control has an important role in protecting an entity from the weaknesses of its
personnel that are made so that they are not in accordance with applicable regulations. SPI is
a supervisory model that is needed because of the need to delegate authority and obligation in
an organization (Arifudin et al., 2020). According to Kusumawati (2012) in Udayani & Sari
(2017) SPI aims to reduce deviant management actions. The Committee of Sponsoring
Organization of The Treadway Commission (COSO) in 2013 in Fajar & Rusmana (2018)
provides a definition that internal control is the impact of the board of directors, management
entities, and other parts of the company on events that occur to ensure that company goals are
achieved, these objectives include:
Operation/performance objectives
There are activities that are effective and efficient in achieving the mission and
fundamental activities of the organization, such as performance standards and resource
observation.
Informational/financial reporting objectives
Providing free, reliable, complete and timely information related to finance and
administration, including the preparation of reliable financial reports and the prevention of
misuse of public information.
Compliance objectives
Applicable laws and regulations will be properly complied with. These are designed to
ensure that the company's activities comply with laws, government regulations, regulatory
advice, and internal policies and procedures.
COSO (2013) in Fajar & Rusmana (2018) states that the elements of internal control
consist of five components: (1) control environment, (2) risk assessment, (3) control
activities, (4) information and communication, and (5) monitoring activities.
Control environment
The control environment is a foundation of all internal control elements that build order
and structure. Control environment able to create a state of control in an organization and
influence organizational actors regarding control. The control environment has a broad
influence on the internal control system as a whole.
Risk assessment
The management of the organization must consider all risks both internal and external or
the possibility of the objectives not being achieved. In addition, the risk that the financial
statements may be materially misrepresented should also be considered. For this reason,
management is expected to be able to estimate the significance of risks, ascertain the
likelihood of risks occurring and ascertain the effects or consequences of identified risks
on the organization (Fourie & Ackermann, 2013).
Control activities
All policies and activity stages should be written guidelines, and the stages for each
activity in the organization should be implemented according to the guidelines. These
prescribed policies and stages of activities need to be reviewed and updated continuously.
Supervisors should review the control function with reference to the relevant procedures.
Any deviation from the identified procedures should be brought to the attention of the
appropriate parties and corrected in a timely manner.
Information and communication
A process is needed to identify information relating to external sources relevant to the
organization. Procedures need to be established to ensure that reporting deadlines are met
and that relevant information is submitted in a timely manner at the appropriate level and
in a format that is easy to analyze. The need for new information should be identified and
addressed.
Monitoring activities
Monitoring includes activities to assess the quality of internal control performance on an
ongoing basis, and ensure that all company activities are carried out in accordance with
organizational objectives and adjust activities as circumstances change. COSO (2013) in
Fajar & Rusmana (2018) explains that the components of monitoring activities consist of
evaluating ongoing activities, separate evaluations, or a combination of the two.
The National Committee for Corporate Governance Policy (KNKCG) explains that GCG
is a series of actions and arrangements used by part of the company to obtain value added to
the company in a sustainable and long-term manner for shareholders while still paying
attention to the needs of other stakeholders based on established laws and regulations.
(Daniri, 2004 in Saputra, 2017). Decree of the Minister of SOEs Number KEP- 117 / MBU /
2002 concerning the Implementation of GCG Practices in SOEs states that GCG is a series of
actions and arrangements used by SOE organs in improving business achievement and
corporate responsibility based on legal and ethical values to realize long-term principal goals
while still paying attention to the needs of other stakeholders.
GCG principles listed in the Regulation of the Minister of State of State-Owned
Enterprises (BUMN) No. PER-01/MBU/2011: PER-01/MBU/2011, among others:
Transparency, meaning openness in making decisions and openness in disclosing material
information relating to the company.
Accountability, meaning that there are clear functions, implementation, and accountability
so that activities are carried out effectively in the company process.
Responsibility, meaning the conformity of corporate governance with the law and the
principles of healthy business entities.
Independency, meaning a situation in which there is professional management of the
company with no conflicting interests and no conflict of interest influence/pressure from
other persons contrary to the law and the principles of a healthy business entity.
Fairness, meaning justice and equality in the fulfillment of stakeholders' rights.
that arise because of agreements and rules.
The principles of GCG can be applied and are expected to be able to maximize company
value and be able to achieve company goals with effective and efficient management,
professionalism, and carry out functions and increase company independence. GCG functions
are important elements in the GCG structure, these functions consist of Rezaee (2006) in
Anugerah (2014):
Oversight function, namely the role performed by the board of directors in the form of
supervision of managerial functions in order to ensure the continuity of the company in
line with its goals.
Managerial function, namely management has a role to manage the company and manage
resources, operations, and delivery related to all information, both financial and non-
financial.
Complience function, which is to comply with laws, regulations, standards and practices
that have been determined to carry out the framework and achieve company goals.
Internal audit function, namely services in the form of providing assurance and advice to
the company in order to achieve operating efficiency, internal control, management risk,
financial reporting, and company management.
Legal and financial advisory function, which is the presence of advisors related to law and
ensures the implementation of company management that complies with laws and other
legal duties. In addition, there are also financial advisors who will provide direction for the
company regarding its finances and planning.
External audit function, namely the external auditor carries out a function to provide an
opinion on the company's financial statements which reveals that the financial statements
presented are in accordance with generally accepted accounting principles and are also
presented fairly (GAAP).
Monitoring function, which is the function performed by shareholders to monitor the
implementation of corporate governance.
IAPI (2014) defines fraud as a deliberate behavior of one or more people in management,
namely someone who has responsibility for management, employees, or third parties by using
deception to get something profitable by breaking the law. IAI (2012) in Ramadhany (2017)
describes accounting fraud into two things (1) misrepresentation that arises as a result of
fraud in financial statements in the form of misrepresentation or deliberate covering of
amounts or disclosures in financial statements in order to deceive users of financial
statements, (2) treatment that should not be carried out on assets (in the form of misuse or
embezzlement) regarding the theft of company assets so as to cause misstatement of financial
statements and not in accordance with generally accepted accounting principles.
Based on Article 378 of the Criminal Code on Fraudulent Acts, fraud is defined as an act
that intends to provide personal or other people's benefits that are contrary to the law, in the
form of using a false name or position, deception, or a series of lying behaviors, encouraging
someone to give him an item, or to give debt or receivables (Tuanakotta, 2010). BPK RI
(2012) explains that fraud in general is an act to provide benefits for oneself or a group
through a method that directly causes losses to other parties and is carried out by parties
inside and / or outside the organization.
The Association of Certified Fraud Examiners (ACFE) in Tuanakotta (2010) illustrates the
fraud scheme with a fraud tree. The branches of fraud and The branches and branches in the
working relationship are depicted in this tree. The three main branches of the fraud tree are
corruption, asset misappropriation, and fraudulent statements.
Corruption
Corruption this time means similar but not the same as the term corruption in United
States law. Corruption includes abuse of power/conflict of interest, bribery, unauthorized
or illegal acceptance of gifts and gratuities in connection with employment or position, as
well as extortion or illegal fees.
Asset misappropriation
Asset misappropriation is the act of taking wealth by illegal means, including activities of
using improperly, embezzling, and stealing company assets or assets carried out by parties
inside or outside the company.
Fraudulent statements
There are two types of fraud committed on financial statements. First, it relates to the
misstatement of financial statements. Second, misleading financial statement information,
such as better than the original situation and often in the form of falsifying or distorting the
situation.
The fraud tree initiated by the ACFE provides benefits because it has mapped fraud in the
scope of work. This map makes it easier for someone to know and determine the type of
fraud that occurs (Tuanakotta, 2010). The use of fraud tree needs to be adjusted from the
conditions of each country. Not everything written in the fraud tree is found in United States,
corrupt actions and the existing business and government climate also affect the fraud found.
Cressey in Tuanakotta (2010) explains that "A trusted person becomes a breach of trust
when he sees himself as a person who has financial problems that cannot be told to others, he
is aware that this problem can be overcome by abusing his authority as a holder of trust in
finance, and his daily activities show himself as someone who can be trusted in using
entrusted funds or wealth." Cressey in Tuanakotta (2010) categorizes it in the fraud triangle.
There are three aspects that influence a person to commit fraud, among others:
Pressure
The perpetrator commits fraud based on the pressure he is under. The pressure in question
is the pressure that surrounds his life (money is needed), and he cannot share his problems
with others.
Perceived opportunity
Cressey in Tuanakotta (2010) argues that there are two elements from the point of view
related to opportunities. First, general information or understanding that a position of trust
can be violated without having to bear consequences. Second, technical skill or the ability
needed to perform the action.
Rationalization
Rationalization or trying to justify one's actions before committing the crime, not after. A
person rationalizes their actions to maintain their identity as someone who can be trusted
(Tuanakotta, 2010).
Research Methods
Qualitative method with literature study or literature review is the method applied in this
research. Literature study or a series of efforts related to the process of collecting library data,
reading and recording, and processing data materials to be researched. The data source for
this research comes from secondary data. Chandrarian (2017) defines secondary data as data
that has been used or published by previous parties or institutions. There is no need to re-
research by testing the validity and reliability of the data because the data can already be
confirmed and published. Previous research, books, news, and other related references are the
data sources in this study.
Research conducted by Saputra (2017) is the main reference in this study. Saputra (2017)
examines the effect of internal systems and GCG implementation on banking fraud. The
secondary reference in this study is research conducted by Ramadhany (2017) examining the
effect of the internal control system and GCG implementation on accounting fraud. Both
studies show the results that fraud can be prevented through the internal control system and
the implementation of GCG. Chandrawati & Ratnawati's (2021) research on fraud triangle
theory is used as an additional reference to reveal the things that cause fraud.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
Results And Discussion
Tuanakotta (2010) provides a specific definition related to the internal control system to
prevent fraud. The internal control system is a system of processes and rules that are prepared
and implemented with the main, if not the only, purpose of preventing and overcoming fraud.
The internal control system must be well designed, in order to emphasize the presentation of
fair and accountable financial statements. Effective and efficient use of company resources
needs to be done in order to obtain financial and non-financial information to make decisions
and a form of compliance with the law.
The COSO framework explains that adequate assurance for the achievement of
organizational goals can be obtained from the implementation of internal control through the
implementation of effective and efficient activities, credible financial reports, monitoring of
assets, and compliance with applicable laws and regulations (Pane, 2018). One way that can
be done to prevent or overcome the possibility of fraud is to implement an internal control
system. Through structured planning and implementation of internal control components,
internal control can be implemented properly and achieve its objectives.
The existence of risk assessment, control, and supervision activities is able to maintain the
stability of the control environment and establish communication and distribution of
company information. The internal control system closes the gap for fraud because every
activity in the company that is carried out has formed a monitoring environment that can be
controlled properly (Pane, 2018). Thus, fraud will be easily detected and difficult to commit.
The concept of GCG emerged due to conflicting interests between stakeholders. This
conflict encourages companies to try to present information that does not actually occur to
users of financial statements, especially if the information is related to measuring company
performance. Irregularities in the presentation of information will have an impact on the truth
of the information needed by users. Therefore, performance improvement is implemented in
the form of GCG as a form of accountability (Soleman, 2013). GCG is a code of ethics
applied by the organization to avoid crimes that violate the law. The transparency and
accountability of financial statements will increase with the application of GCG principles.
With transparency and accountability, it can narrow the opportunities for fraud to occur.
The need for GCG agrees with what is conveyed in the agency theory "Agency
relationship is a contract under which one or more persons (principal(s)) engage another
person (agent) to perform some service on their behalf which involves delegating some
decision making authority to the agent" (Razaee, 2009 in The theory explains that the
distinction between the principal and the agent is a contract between the principal and the
agent between the owner (principal) and the company manager (agent) raises agency
problems. This separation also causes the formation of information asymmetry, namely the
agent has access to information that does not belong to the principal. Rahmawati (2016) in
Samanto & Setyaningsih (2020) explains that there is a gap in the company's internal
financial knowledge caused by information asymmetry between managers (agents) and
owners (principals) so that managers can increase profits through projects to get
compensation or owner compensation. Of course, this information asymmetry causes fraud
because it causes engineering in the financial statements. In an effort to overcome this, the
implementation of GCG is needed to ensure that the rights and relationships between these
stakeholders are guaranteed.
Management as an agent performs work in the company for shareholders (principals) in
order to realize good company performance. The role of GCG is to ensure that management
does not take actions that deviate from established regulations (Suryatimur et al., 2020). GCG
can be achieved by building an internal control system in every company activity and
operating effectively. Fraud can be prevented by internal controls that are able to reduce
stress, opportunities, and increase personal morale at all levels of the organization. Fraud can
also be prevented by eliminating the factors that cause it to occur by implementing GCG
principles, namely transparency, accountability, responsibility, independency, and fairness
(Soleman, 2013).
Research conducted by Soleman (2013) examining the effect of internal control and GCG
on fraud prevention suggests the results that fraud can be prevented through internal control
and applying GCG principles. Because these variables have a positive effect on fraud. This
shows that fraud prevention can be done through eliminating factors that encourage fraud by
applying GCG principles and reducing pressure and providing opportunities for moral
improvement for each individual in the organization.
In line with Soleman's research (2013), Ramadhany (2017) also conducted research related
to the internal control system and GCG implementation on fraud. The study found that the
internal control system and GCG implementation have an impact on the tendency of
accounting fraud. A structured and adequate internal control system is needed in order to
achieve goals. In addition, GCG which is implemented into a corporate culture will close
opportunities for fraud.
Saputra (2017) conducted research related to the effect of internal systems and GCG on
fraud in banking and obtained the results that the implementation of an internal control
system and good corporate management had a significant negative effect on fraud, meaning
that a structured internal control system and the implementation of GCG in the banking
industry are important in achieving the company's vision and mission.
Research conducted by Kurniawan & Izzaty (2019) shows the results that the
implementation of GCG is able to prevent fraud and will provide a greater possibility of
fraud if the principles of GCG are not implemented. Internal control applied to agencies is
also able to prevent fraud effectively and is able to minimize individual opportunities to be
able to act fraudulently.
Napitupulu & Ramadhita (2022) conducted tests on financial service sector companies.
The study found that internal control and GCG simultaneously have an effect on fraud
prevention. In this study, internal control has been implemented properly and the company
has excellent corporate governance.
Farochi et al. (2022) also expressed the same results in their research. Internal control and
GCG have a positive and significant effect on fraud prevention. adequate assurance is
obtained with the implementation of the company's internal control, that is, the agency's goals
will be achieved, including fraud prevention. Each The principles of GCG are always related
to openness, clear responsibility, non-discrimination, and control so that fraud can be
prevented by the company.
In contrast to the studies described earlier, Adiko & Astuty (2019) tested internal control
and GCG. The results show that these two things have no effect on fraud prevention. The
ineffectiveness of internal control is caused by several things, namely the company's inability
to detect future risks, lack of employee awareness of the importance of complying with
applicable regulations, and employee indifference to work that is not their responsibility. This
study also states that there is no effect of GCG on fraud prevention because the actors in the
company do not apply the value system and culture applied by the company and there is non-
objective decision making resulting in the emergence of personal interests and opening up
opportunities for someone to commit fraud.
The results of research conducted by Samanto et al. (2022) show the results that internal
control does not have a significant effect on fraud prevention, this is because the company is
unable to detect future risks that will occur which results in internal control in the company
not running properly. Meanwhile, GCG has a significant influence on fraud prevention
variables. This is supported by several things such as business actors who implement the
ethical and cultural systems set by the company.
Consistent results have not been obtained from several studies described above. Further
research related to the role of the internal control system and GCG with various alternative
methods is needed to obtain accurate and consistent results, so that there are research results
that can be a reference for interested parties.
Conclusion
Based on the results of the research and discussion that has been described, the
conclusions that can be drawn are:
Fraud is an act of intentional fraud and causes losses to many parties.
The internal control system has an important role in fraud prevention because with a
system that is measurable and in accordance with the needs of the company, it will be easy
to detect and prevent fraud.
The implementation of GCG can prevent fraud by implementing GCG principles.
Evaluation of the internal control system and GCG implemented needs to be done to
increase the reliability of the system.
