Analysis of Audit Competencies and Internal Control on Detecting Potential Fraud Occurrences

• Published in: Universal Journal of Accounting and Finance
• Main Author: Solichin M.; Sanusi Z.M.; Johari R.J.; Gunarsih T.; Shafie N.A.
• Format: Article
• Language: English
• Published: Horizon Research Publishing 2022
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85122762277&doi=10.13189%2fujaf.2022.100118&partnerID=40&md5=39ed8108e24b4474a643ea9c5d85033f

It is stated that fraud in the government sector includes deceptive acts such as asset misappropriation, loss of state income, falsification of financial records and reports, and mark-ups in government financing. The purpose of this study is to investigate the potential impact of audit competences (professional skepticism and audit experience) and internal control on an auditor's capacity to detect potential fraud occurrences. Primary data were gathered via a printed questionnaire distributed to the 149 government auditors who work at Indonesia's Inspectorate Office. The findings, based on the Partial Least Squares of structural equation modelling, show that both audit competences have a significant impact on the capacity to detect probable fraud. Internal control, on the other hand, has no direct impact on the capacity to detect potential fraud. The findings show that internal control significantly moderates the link between audit competencies (professional skepticism and audit experience) and the auditor's ability to detect potential fraud occurrences. This research offers practical government suggestions for improving government auditors' professional audit competencies and abilities. Audit authorities should be able to create a more effective internal control structure that prioritizes feedback and learning. The limitations of the study as well as future research are highlighted. Copyright © 2022 by authors, all rights reserved.