The role of internal audit and leadership style in increase of fraud prevention: A stewardship theory perspective

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Abstract

This research was conducted due to the prevalence of fraud, despite several preventative regulations. The phenomenon of fraud persists in all fields, including state university education. This is quantitative research with a population of 122 internal auditors at state universities to analyze the role of internal audit and transformational leadership style on fraud prevention from a stewardship theory perspective. Purposive sampling was conducted to obtain 65 auditors as samples, and the hypothesis test was analyzed by Statistical Package for the Social Sciences version 25 (SPSS 25). Based on the results, the first hypothesis indicates that internal audit positively affects fraud prevention. Internal audit is part of the organization and plays a role in detecting and preventing fraud. Meanwhile, the second hypothesis suggests that the transformational leadership style positively affects fraud prevention. Transformational leadership can reduce the fraud committed by subordinates because leaders have good vision, rhetoric, and special management skills, to build strong emotional relationships. For internal auditors and leaders, this research contributes to improving fraud prevention in the university environment by maximizing the role of internal audit and leadership. This can increase the impetus to achieve organizational goals efficiently and effectively. Further research can develop the control environment and manage risk for fraud prevention.

Keywords: Internal Audit, Transformational Leadership Style, Fraud Prevention, Stewardship Theory

Authors’ individual contribution: Conceptualization — S.N.K., A.R., and I.J.; Methodology — S.N.K., A.R., and I.J.; Formal Analysis — S.N.K., A.R., and I.J.; Writing — Original Draft — S.N.K., A.R., and I.J.; Writing — Review & Editing — S.N.K., A.R., and I.J.; Supervision — S.N.K., A.R., and I.J.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M10, M42

Received: 06.07.2023
Accepted: 17.11.2023
Published online: 21.11.2023

How to cite this paper: Khikmah, S. N., Rohman, A., & Januarti, I. (2023). The role of internal audit and leadership style in increase of fraud prevention: A stewardship theory perspective [Special issue]. Corporate & Business Strategy Review, 4(4), 271–278. https://doi.org/10.22495/cbsrv4i4siart8