Fraud Prevention in the Public Sector: The Role of Internal Audit

Abstract

Fraud seriously impacts public institutions' finances and reputation, so it is essential to identify factors that can minimize the risk of fraud incidents. This research aims to analyze and evaluate the effectiveness of the role of internal audit in preventing fraud in the public sector. This research uses a qualitative approach with descriptive methods. The research results identified several factors that cause fraud in the public sector, including financial pressure, desired lifestyle, gambling problems, pressure from the family environment, dissatisfaction with the company, and arrogance. These factors can create incentives to engage in fraudulent behavior. In addition, the success of risk management in managing fraud risk depends on implementing adequate internal controls, strict monitoring, and an organizational culture that supports integrity. The role of internal auditors is crucial in preventing fraud by identifying potential risks, testing the effectiveness of internal controls, and creating a transparent work environment. Internal auditors also play a role in eliminating the causes of fraud, creating a culture that values honesty, implementing an effective monitoring process, and building a basis for accountability and transparency in local government administration.