Evaluation of Internal Audit Function in Detecting Skimming Fraud at PT ABC
Abstract
Fraud is a type of skimming that poses a serious threat to companies in the financing sector, including PT ABC, due to its impact on finance, reputation, and law. Internal audits play an important role in detecting and preventing skimming fraud, but their effectiveness in financing companies has not been widely explored. This study aims to evaluate the effectiveness of PT ABC's internal audit function in detecting and preventing skimming fraud. Thematic and structural narrative analysis approaches were used, with primary data obtained through semi-structured interviews with PT ABC's internal auditors. The results of the study indicate that the internal audit function at PT ABC effectively detects and reduces skimming fraud, as seen from the decrease in the number of cases from 55 at the end of 2023 to 22 cases in September 2024, as well as the reduced loss value. Implementing strict policies, using COLLAR technology, and a global standards-based audit strategy play an important role in achieving these results.
Keywords: Internal Audit; Fraud Prevention; Internal Control; Skimming Fraud
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References
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Xin, Q., Zhou, J., & Hu, F. (2018). The economic consequences of financial fraud: evidence from the product market in China. China Journal of Accounting Studies, 6(1), 1–23. https://doi.org/10.1080/21697213.2018.1480005
ACFE. (2024). Fraud 101: What Is Fraud? Association of Certified Fraud Examiners. https://www.acfe.com/fraud-resources/fraud-101-what-is-fraud
Al-abedi, T. K. (2022). Empirical study for the strategic role of internal audit in dedicating fraud risk in the financial statement: Evidence from Iraq. Journal of Administration and Economics, 133, 308–322.
Al-Matari, E. M., & Mgammal, M. H. (2019). The moderating effect of internal audit on the relationship between corporate governance mechanisms and corporate performance among Saudi Arabia listed companies. Contaduria y Administracion, 64(4), 1–27. https://doi.org/10.22201/FCA.24488410E.2020.2316
Ben abdelaziz, F., Neifar, S., & de Bourmont, M. (2015). Auditing and game theory: A survey. Multiple Criteria Decision Making in Finance, Insurance and Investment, 249–272.
Bernardino, D., Pedrosa, I., & Laureano, R. M. S. (2018). Analytical methods for auditing and anomaly/fraud detection. 2018 13th Iberian Conference on Information Systems and Technologies (CISTI), 1–6.
Bleibtreu, C., & Stefani, U. (2018). The effects of mandatory audit firm rotation on client importance and audit industry concentration. Accounting Review, 93(1), 1–27. https://doi.org/10.2308/accr-51728
Bonrath, A., & Eulerich, M. (2024). Internal auditing’s role in preventing and detecting fraud: An empirical analysis. International Journal of Auditing, 28(4), 615–631. https://doi.org/10.1111/ijau.12342
ElKelish, W. W., Hussain, A., Al Mahameed, M., & Irsyadillah, I. (2024). Exploring the impact of organizational culture on governance transparency in audit firms: evidence from the United Arab Emirates emerging market. Journal of Applied Accounting Research. https://doi.org/10.1108/JAAR-06-2023-0170
Fahmi, M., & Shafira, M. A. (2023). The Role of Internal Audit in Fraud Prevention and Detection (Case Study in PT HBE). Proceeding Medan International Conference on Economic and Business, 1, 2086–2093.
Fatimah, K., & Pramudyastuti, O. L. (2022). Analisis Peran Audit Internal Dalam Upaya Pencegahan Dan Pendeteksian Kencenderungan Kecurangan Akuntansi (Fraud). Jurnal Ilmiah Akuntansi Dan Bisnis, 7(2), 235–243.
Ha Le, T. T., & Tran, M. D. (2018). The effect of internal control on asset misappropriation: The case of Vietnam. Business and Economic Horizons (BEH), 14(4), 941–953.
Hanay, U., İnce, H., & Işık, G. (2024). Identifying Key Factors of Reputational Risk in Finance Sector Using a Linguistic Fuzzy Modeling Approach. Systems, 12(10). https://doi.org/10.3390/systems12100440
Hikmah, A. N., & Wondabio, L. S. (2023). Evaluasi Peranan Audit Internal pada Penerapan Strategi Anti Fraud. Owner: Riset Dan Jurnal Akuntansi, 7(4), 3285–3294.
Islamovich, I. S. (2021). Improving The Methodology For Evaluating The Internal Control System In The Audit Process Based On International Standards. Asian Journal of Technology & Management Research (AJTMR) ISSN, 2249(0892).
Karmakar, A. K., Bagchi, P., & Karmakar, S. (2023). Consequences of corruption on economy, politics, and society: The case of India. In Theory and Practice of Illegitimate Finance (pp. 54–67). https://doi.org/10.4018/979-8-3693-1190-5.ch003
Mokhitli, M., & Kyobe, M. (2019). Examining factors that impede internal auditors from leveraging information technology for continuous auditing. 2019 Conference on Information Communications Technology and Society, ICTAS 2019. https://doi.org/10.1109/ICTAS.2019.8703610
Mujalli, A. (2024). The influence of E-auditing adoption on internal audit department performance amid COVID-19 in Saudi Arabia. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2023.2295608
Nisak, I. A., & Rochayatun, S. (2023). The role of internal audit, fraud detection, and prevention in universities: a literature review. Dialektika: Jurnal Ekonomi Dan Ilmu Sosial, 8(1), 63–71.
Rahmat, M., Wisra, M. Y., Kholik, M. A., & Basnawati, S. R. (2023). Pengaruh Audit Internal, Kompetensi Auditor, Kesesuaian Kompensasi Dan Whistleblowing System Terhadap Pencegahan Fraud. Postgraduate Management Journal, 2(2), 42–54.
Sepala, P., Herath, H., & Munasinghe, M. (2022). Effect of internal audit on fraud management in the financial service sector in Sri Lanka. International Journal of Accountancy, 2(2).
Sudirman, S., Sasmita, H., Krisnanto, B., & Muchsidin, F. F. (2021). Effectiveness of Internal Audit in Supporting Internal Control and Prevention of Fraud. Bongaya Journal of Research in Accounting (BJRA), 4(1), 8–15.
Sunarto, F. W., & Riantono, I. E. (2022). Internal Auditors’ Perceptions of Factor Influencing the Effectiveness of Fraud Risk Management in Indonesian Banking Sector. ACM International Conference Proceeding Series, 55–62. https://doi.org/10.1145/3535782.3535791
The Institute of Internal Auditors. (2024). Definition of Internal Auditing. IIA. https://www.theiia.org/en/standards/what-are-the-standards/definition-of-internal-audit/
Xin, Q., Zhou, J., & Hu, F. (2018). The economic consequences of financial fraud: evidence from the product market in China. China Journal of Accounting Studies, 6(1), 1–23. https://doi.org/10.1080/21697213.2018.1480005
Published
2025-01-06
How to Cite
PUTRI, Nanda Meidiana; SIREGAR, Sylvia Veronica Nalurita Purnama.
Evaluation of Internal Audit Function in Detecting Skimming Fraud at PT ABC.
E-Jurnal Akuntansi, [S.l.], v. 35, n. 3, jan. 2025.
ISSN 2302-8556.
Available at: <https://ojs.unud.ac.id/index.php/akuntansi/article/view/122393>. Date accessed: 05 apr. 2025.
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