Determinants of Fraud Tendency in the Management of Village Funds

This study aimed to determine the effect of internal control system, rationalization and information asymmetry on fraud tendency in the management of village funds with the organizational ethical culture as a moderating variable. The population in this study was 61 village officials in Kejajar Sub-district, all members of the population were sampled. Data collection technique used a questionnaire. The data analysis method used descriptive analysis and moderation regression analysis with test of absolute difference value. The results showed that the internal control system had a significant negative effect and rationalization had a positive and significant effect, while the information asymmetry did not affect the fraud tendency in the management of village funds. The organizational ethical culture failed to moderate the relationship between the internal control system and the rationalization of the fraud tendency in the management of village funds, but was able to weaken the relationship of information asymmetry on the fraud tendency in the management of village funds. Suggestions in this study are for village officials / PPKD to minimize fraud by improving internal control systems through the implementation of SOPs, good management, developing ‘village partner’ applications, and not justifying any form of fraud.