Whistleblowing, fraud prevention, and fraud awareness: Evidence from the Palembang Local Government of Indonesia


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Fraud is an enormous obstacle to a country’s development because it can cause failure in achieving goals. The most significant source of fraud in Palembang Local Government of Indonesia arises from the procurement of goods and services, which reached 49.1% in 2020. Therefore, this study aims to examine how fraud awareness and good government governance affect fraud prevention. This paper targets one of the Regional Government areas of Palembang City, Indonesia. One hundred twenty-two respondents comprised the head of budget staff, budget user authority staff, and commitment-making committee staff. Data were obtained using a questionnaire with a Likert scale. The study employed two endogenous variables (fraud prevention and fraud awareness), one intervening (fraud awareness), and two exogenous variables (whistleblowing and good government governance). Following this, structural equation models were used to examine the relationships between each variable. The study results show a significant positive effect of whistleblowing and good governance on fraud awareness. In contrast, fraud awareness had no significant impact on fraud prevention. The obtained results found that fraud awareness cannot mediate the whistleblowing system through fraud prevention; also, fraud awareness is not a moderating variable to influence good governance through fraud prevention. The paper contributed empirical evidence to explore fraud prevention approaches by maintaining consistency in the implementation of the whistleblowing system, anti-corruption culture, and supervision to identify unusual activities.

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    • Figure 1. Structural equation model tests
    • Table 1. Respondent characteristics
    • Table 2. Confirmatory factor analysis
    • Table 3. Hypotheses testing
    • Conceptualization
      Periansya Periansya
    • Formal Analysis
      Periansya Periansya, Sopiyan A. R., Abdul Basyith
    • Funding acquisition
      Periansya Periansya
    • Methodology
      Periansya Periansya, Abdul Basyith
    • Resources
      Periansya Periansya, Evada Dewata, Yuliana Sari
    • Validation
      Periansya Periansya, Abdul Basyith
    • Writing – original draft
      Periansya Periansya, Evada Dewata, Yuliana Sari
    • Data curation
      Evada Dewata, Sopiyan A. R.
    • Investigation
      Evada Dewata, Sopiyan A. R.
    • Supervision
      Evada Dewata, Yuliana Sari, Abdul Basyith
    • Project administration
      Sopiyan A. R.
    • Software
      Sopiyan A. R., Yuliana Sari
    • Visualization
      Sopiyan A. R.
    • Writing – review & editing
      Sopiyan A. R., Abdul Basyith