Perceptions of Government External Auditors on The Effectiveness of Red Flags in Detecting Fraud on Procurement of Goods and Services in West Java

    Hengki ,Iman Budiman ,Silviana
    Keywords: Auditor perceptions, demographic factors, red flags, fraud, procurement of goods and services. ,

    Abstract

    Abstract
    This study aimed to determine which red flags are considered effective for detecting fraud by auditors
    and to determine differences in perceptions among auditors with different demographic factors (gender,
    certifications: certified fraud examiner (CFE)/ certified fraud auditor (CFrA), tenure, position, and fraudrelated experience) regarding the effectiveness of red flags on the procurement of goods and services.
    Respondents were the government external auditors who work at the Audit Board of the Republic of
    Indonesia (BPK RI), West Java Province Representatives by obtaining data through questionnaires.
    Perceptions about the effectiveness of red flags were measured by an interval scale of 41 red flags
    statements adopted from the Decree of the BPK RI concerning Technical Instructions for Inspection of
    Procurement of Goods and Services and Inspection of Infrastructure Expenditures in 2019. Data analysis
    was performed using the independent sample t-test and ANOVA test. The results showed that the most
    effective red flags perceived by the respondent for detecting fraud in the procurement of goods and
    services were “Owner price (HPS) prepared by prospective participants/together with the officer who
    signed the agreement (PPK)” (
    mean= 4.240), “Ad hoc team selection and/or PPK who provide detailed
    information on HPS to prospective bidders” (
    mean= 4.170), and "There is a fictitious project" (mean= 4.140).
    In general, there were no differences in the perception among auditors with different demographic
    factors except for the difference in tenure (p > 0.05). It can be concluded that the most effective
    red
    flags
    perceived to detect fraud on the procurement of goods and services was “Owner price (HPS)
    prepared by prospective participants/ together with the officer who signed the agreement (PPK)” and
    there was a difference in the perceptions among auditors based on the tenure.

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