EXAMINING THE IMPACT OF ORGANIZATIONAL CULTURE, INTERNAL CONTROL, AND INDIVIDUAL MORALITY ON FRAUD RISK: AN EMPIRICAL STUDY

Abstract

This research aims to examine the influence of organizational culture, internal control systems, and individual morality on the risk of fraud in the management of the Village Revenue and Expenditure Budget. The method used in this study is a quantitative approach that utilizes primary data. The population in this study consists of village government offices in the Poncokusumo District of Malang. The sampling method employed is purposive sampling, with a population of 17 village government offices and a sample size of 85 respondents. Data collection was conducted using questionnaires. The data were analyzed using Structural Equation Modelling with Partial Least Squares (SEM-PLS). The research findings suggest that organizational culture, internal control systems, and individual morality have a significant impact on the risk of fraud. These results indicate that to mitigate the risk of fraud in managing the Village Revenue and Expenditure Budget, the village government should enhance its organizational culture, strengthen internal control systems, and promote high standards of individual morality within its environment. Enhancing individual morality is particularly critical, as it promotes ethical behavior and personal accountability among village officials, thereby serving as a fundamental deterrent against fraudulent actions.