AUDIT OPINION AND FRAUD IN LOCAL GOVERNMENT: CASE OF INDONESIA
This paper aims to examine the relationship between government audit opinion and fraud in local government in Indonesia. We utilize logistic regression analysis to test the hypothesis using a sample of 28 local governments in West Java province in periods of the fiscal year 2012 to 2017. This stu...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/50558 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | This paper aims to examine the relationship between government audit opinion and
fraud in local government in Indonesia. We utilize logistic regression analysis to
test the hypothesis using a sample of 28 local governments in West Java province
in periods of the fiscal year 2012 to 2017. This study finds that audit opinion
significantly affects the fraud. There is a strong relationship between audit opinion
and fraud. Moreover, the unqualified opinion awarded by The Audit Board of the
Republic of Indonesia (BPK RI) to local government represented the real condition
of local governments in their good governance and accountability. This finding is
also robust when we measure fraud by other proxies namely penalty and state-loss.
This study provides a useful suggestion for audit institution namely BPK RI
regarding the importance of regular government auditing. Follow-up the audit
recommendations play an important role in improving internal control
effectiveness, accountability, governance, and transparency. This improvement will
reduce the level of fraud in local governments. This study not only fills the gap of
few literature on how to reduce fraud by considering the role of auditing but also
measures the important role of government auditing in reducing and preventing
fraud. |
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