The Influences of Internal Control and Good Corporate Governance on Frauds: Multiple Linear Regression Analysis

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Muhammad Radhian Zahidi, Sabrina Nur Arafah, Mirna Dianita

Abstract

Purpose: This study aims to analyze the effect of internal control on fraud, the effect of good corporate governance on fraud, and the effect of internal control and good corporate governance on fraud. This research was conducted at the Rural Bank (BPR) in the municipality of Bandung


Theoretical framework: Fraud is often found in companies including goods, services, manufacturing, and banking companies. Fraud can negatively affect individuals and organizations. Fraud is an unlawful act that occurs due to pressure, opportunity, and rationalization to gain personal or collective benefits that can harm others (Christine & Apriwandi, 2022; Febriani & Suryandari, 2019)’.The’Association of Certified Fraud Examiners (ACFE) Indonesia showed fraud is mostly found through media reports and was mostly conducted by company employees (Association of Certified Fraud Examiners Indonesia, 2019)


Design/methodology/approach: This study uses data collection techniques by distributing questionnaires to rural banks in the city of Bandung with a collection of 30 respondents. The obtained questionnaires were tested using validity and reliability to test the feasibility of the obtained questionnaire data. The test equipment used in this study is to use the test requirements analysis including the normality test, multicollinearity test, and heteroscedasticity test. The method used in data analysis is Multiple Linear Regression Analysis, Simultaneous Significance Test, Partial Significance Test, and Coefficient of Determination Test


Findings: The results of this study indicate that internal control has a negative and insignificant effect on fraud. Good corporate governance has a positive and significant effect on fraud. As well as internal control and good corporate governance simultaneously affect fraud.


Research, Practical & Social implication: Internal Control and Good Corporate Governance (GCG) simultaneously affect the occurrence of fraud, Internal control has a negative and insignificant influence on fraud, meaning that the presence of internal control does not have any impact on fraud


Originality/value: Implying that’internal’control’and’Good Corporate’Governance’simultaneously’affect the frauds.

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