IDEAS home Printed from https://ideas.repec.org/a/jfr/ijfr11/v11y2020i4p316-328.html
   My bibliography  Save this article

Internal Control, Organizational Culture, and Quality of Information Accounting to Prevent Fraud: Case Study From Indonesia's Agriculture Industry

Author

Listed:
  • Puji Rahayu Setyaningsih
  • Nengzih Nengzih

Abstract

This research wants to find out how far internal control, organization culture and the quality of accounting information system will help the small-medium enterprises (SMEs) to prevent fraud. by applying the case study approach in achieving its aims and objectives. This study is done by a used case study from SMEs in the agriculture industry in Lampung province, Indonesia. The data were collected through observations and semi-structured interviews with employed and managerial staff. This research applied a mixed method in collecting and analyzing data, which were document analyses and interviews. Applying more than a single method in collecting data enables the researcher to compare and to verify the information accuracy (Brewer and Hunter 2006). This method can increase the credibility and validity of the findings because the final bias will depend on one method which later can be avoided (Yin 2012). This type of research is quantitative descriptive research. The purpose of this descriptive research is to provide a descriptive, systematic, factual and accurate description of the facts, properties, and relationships between the phenomena investigated. All data that will be used in this study is sourced from the results of respondents' answers to the questionnaire given to employees at PT. XYZ as many as 70 respondents with the unit of analysis are part of Business Control, Human Capital, Finance, Marketing, and Operations. The sampling technique that uses saturated sampling, which is a sampling technique where all members of the population will be used as samples. The results of the study show that some weaknesses of the internal controls have been identified as one of the factors of fraud. The results show that Internal Control Organizational Culture and Quality of Information Accounting have a positive significant effect to prevent fraud.

Suggested Citation

  • Puji Rahayu Setyaningsih & Nengzih Nengzih, 2020. "Internal Control, Organizational Culture, and Quality of Information Accounting to Prevent Fraud: Case Study From Indonesia's Agriculture Industry," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 316-328, July.
    • Handle: RePEc:jfr:ijfr11:v:11:y:2020:i:4:p:316-328
    DOI: 10.5430/ijfr.v11n4p316
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/16867/11267
    Download Restriction: no
    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/16867
    Download Restriction: no
    File URL: https://libkey.io/10.5430/ijfr.v11n4p316?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Guojin Gong & Bin Ke & Yong Yu, 2013. "Home Country Investor Protection, Ownership Structure and Cross‐Listed Firms' Compliance with SOX‐Mandated Internal Control Deficiency Disclosures," Contemporary Accounting Research, John Wiley & Sons, vol. 30(4), pages 1490-1523, December.
    2. Nan Hu & Baolei Qi & Gaoliang Tian & Lee Yao & Zhen Zeng, 2013. "The impact of ineffective internal control on the value relevance of accounting information," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 20(3), pages 334-347, September.
    3. Hermiyetti Hermiyetti, 2010. "Pengaruh Penerapan Pengendalian Internal Terhadap Pencegahan Fraud Pengadaan Barang," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 14(2), pages 1-12, Desember.
    4. Warrick, D.D., 2017. "What leaders need to know about organizational culture," Business Horizons, Elsevier, vol. 60(3), pages 395-404.
    5. Skaife, Hollis A. & Veenman, David & Wangerin, Daniel, 2013. "Internal control over financial reporting and managerial rent extraction: Evidence from the profitability of insider trading," Journal of Accounting and Economics, Elsevier, vol. 55(1), pages 91-110.
    6. Dan Weiss, 2014. "Internal Controls in Family-Owned Firms," European Accounting Review, Taylor & Francis Journals, vol. 23(3), pages 463-482, September.
    7. Rusman Soleman, 2013. "Pengaruh Pengendalian Internal Dan Good Corporate Governance Terhadap Pen Cegahan Fraud," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 17(1), pages 57-74, Juni.
    8. Hermiyetti Hermiyetti, 2010. "Pengaruh Penerapan Pengendalian Internal Terhadap Pencegahan Fraud Pengadaan Barang," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 14(2).
    9. Rizki Hamdani & Ahmad Riski Albar, 2016. "Internal Controls In Fraud Prevention Effort: A Case Study," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 20(2), pages 127-135, Desember.
    10. Su, Lixin (Nancy) & Zhao, Xuezhou (Rachel) & Zhou, Gaoguang (Stephen), 2014. "Do customers respond to the disclosure of internal control weakness?," Journal of Business Research, Elsevier, vol. 67(7), pages 1508-1518.
    11. Cho, Myojung & Chung, Kwang-Hyun, 2016. "The effect of commercial banks' internal control weaknesses on loan loss reserves and provisions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 12(1), pages 61-72.
    12. Rusman Soleman, 2013. "Pengaruh Pengendalian Internal Dan Good Corporate Governance Terhadap Pen Cegahan Fraud," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 17(1), pages 57-74.
    13. Rizki Hamdani & Ahmad Riski Albar, 2016. "Internal controls in fraud prevention effort: A case study," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 20(2), pages 127-135.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ida Bagus Anom Yasa & I Ketut Sukayasa & Ni Made Mega Abdi Utami, 2022. "Organizational culture moderates the effect of bystander effect and internal control on accounting fraud trends in village credit institutions in Jembrana Regency," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(7), pages 210-217, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chalmers, Keryn & Hay, David & Khlif, Hichem, 2019. "Internal control in accounting research: A review," Journal of Accounting Literature, Elsevier, vol. 42(C), pages 80-103.
    2. Oliver Henk, 2020. "Internal control through the lens of institutional work: a systematic literature review," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(3), pages 239-273, September.
    3. Mai Dao & Trung Pham & Hongkang Xu, 2022. "Internal control effectiveness and trade credit," Review of Quantitative Finance and Accounting, Springer, vol. 59(4), pages 1423-1452, November.
    4. Dian Nustanti Ndaomanu & Yefta Andi Kus Noegroho, 2022. "The Application of Governance and Internal Government Controlling System on the Local Government Performance," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 139-155.
    5. Analisa Analisa, 2020. "Factors influencing unethical behaviour in banking industry," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 2(2), pages 97-107, May.
    6. Li, Yuanhui & Li, Xiao & Xiang, Erwei & Geri Djajadikerta, Hadrian, 2020. "Financial distress, internal control, and earnings management: Evidence from China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(3).
    7. Walter Amedzro St-Hilaire & Patrick Boisselier, 2018. "Evaluating profitability strategies and the determinants of the risk performance of sectoral and banking institutions," Post-Print hal-03220229, HAL.
    8. Kaja Prystupa, 2017. "The Role of Organizational Culture in KnowledgeManagement in Small Companies," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 13(3), pages 151-173.
    9. Goergen, Marc & Renneboog, Luc & Zhao, Yang, 2019. "Insider trading and networked directors," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 152-175.
    10. Salman Arif & John D. Kepler & Joseph Schroeder & Daniel Taylor, 2022. "Audit process, private information, and insider trading," Review of Accounting Studies, Springer, vol. 27(3), pages 1125-1156, September.
    11. Wunhong Su & Liuzhen Zhang & Chao Ge & Shuai Chen, 2022. "Association between Internal Control and Sustainability: A Literature Review Based on the SOX Act Framework," Sustainability, MDPI, vol. 14(15), pages 1-30, August.
    12. Sadok El Ghoul & Omrane Guedhami & Robert Nash & He (Helen) Wang, 2022. "Economic policy uncertainty and insider trading," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 45(4), pages 817-854, December.
    13. Rahman, Dewan & Malik, Ihtisham & Ali, Searat & Iqbal, Jamshed, 2021. "Do co-opted boards increase insider profitability?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    14. Niko Cajander & Arto Reiman, 2020. "Work Commitment Modes of Temporary Agency Workers in Restaurants," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 6(2), pages 65-72.
    15. Chen, Shenglan & Ma, Hui & Wu, Qiang & Zhang, Hao, 2023. "Does common ownership constrain managerial rent extraction? Evidence from insider trading profitability," Journal of Corporate Finance, Elsevier, vol. 80(C).
    16. Minhang Deng & Yunyi Wang & Gaoliang Tian & Bozhi Xu & Yuyan Tang, 2023. "Institutional investors' corporate site visits and resource extraction: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(5), pages 5211-5243, December.
    17. He, Feng & Du, Hanyu & Yu, Bo, 2022. "Corporate ESG performance and manager misconduct: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 82(C).
    18. Martin Eling & David Pankoke, 2016. "Costs and Benefits of Financial Regulation: An Empirical Assessment for Insurance Companies," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 529-554, October.
    19. Ari Fahimatussyam Putra Nusantara & Gugus Irianto & Yeney Widya Prihatiningtias, 2020. "Fraud prevention and detection practices in the perspective of Jember Regency internal auditor," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 377-384, July.
    20. Azeem, Muhammad & Ahmed, Munir & Haider, Sajid & Sajjad, Muhammad, 2021. "Expanding competitive advantage through organizational culture, knowledge sharing and organizational innovation," Technology in Society, Elsevier, vol. 66(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:ijfr11:v:11:y:2020:i:4:p:316-328. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://ijfr.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.