Optimizing Government Internal Audits through the Implementation of Blockchain Technology for Fraud Prevention
DOI:
https://doi.org/10.54518/rh.5.6.2025.907Keywords:
Blockchain Technology, Fraud Prevention, Government Internal Audit, Public Sector GovernanceAbstract
Fraud in public financial management remains a major challenge in developing countries like Indonesia, where weak internal controls and low transparency facilitate corruption, data manipulation, and budget misuse. This study examines the influence of government internal audits on fraud prevention and the role of blockchain technology in enhancing audit effectiveness within the Barru Regency government. A quantitative approach was employed, with data collected via questionnaires from 70 respondents across seven purposively selected government agencies. Data were analyzed using Structural Equation Modeling (SEM) with Partial Least Squares (PLS) through SmartPLS 4. The results indicate that internal audits positively and significantly impact fraud prevention, and blockchain technology also contributes significantly to reducing fraud. However, the moderating effect of blockchain on the relationship between internal audits and fraud prevention was found to be insignificant, suggesting that current blockchain adoption does not enhance audit effectiveness. The model explains 83.5% of the variance in fraud prevention, demonstrating strong predictive power. These findings highlight that while internal audits and blockchain independently support fraud prevention, effective integration requires comprehensive digital transformation, supported by political commitment, clear regulations, and capacity building, to fully realize blockchain’s potential in strengthening public sector governance.
Downloads
References
Abiodun, E. A. (2020). Internal control procedures and firm’s performance. International Journal of Scientific & Technology Research, 9(2), 6407-6415.
Aisyah, S., Pakpahan, D., Fadillah, T., Yanti, A., Anindya, D., Anggraini, D., Habibie, M., Juliansyah, R., & Sembiring, E. (2023). The influence of internal control, audit committee, and good corporate governance on fraud prevention at PT. Inalum. Economic and Business Horizon, 2(3), 19–33.
Alfian, A., Ritchi, H., & Adrianto, Z. (2023). Fraud analytics practices in public-sector transactions: a systematic review. Journal of Public Budgeting, Accounting & Financial Management, 35(5), 685–710.
Alina, C. M., Cerasela, S. E., & Raluca-Andreea, T. (2018). The role of internal audit in fighting corruption. Ovidius University Annals, Economic Sciences Series, 18(2), 566-569.
Amyar, F., Rahma, A., Azis, N., & Suwarno, S. (2023). The effect of auditor’s professional skepticism and whistleblowing system on fraud detection: Evidence from Indonesian public sector audit. Research Horizon, 3(4), 477–486.
Bari, A. H. A., Abed, R. A., Kahdim, R. M., Hasan, H. F., Sharaf, H. K., & Alwan, A. S. (2024). The role of internal auditing in corruption control and enhancing corporate governance: A board of directors’ outlook. Corporate Board: Role, Duties and Composition, 20(2), 120-127.
Boufounou, P., Eriotis, N., Kounadeas, T., Argyropoulos, P., & Poulopoulos, J. (2024). Enhancing internal control mechanisms in local government organizations: a crucial step towards mitigating corruption and ensuring economic development. Economies, 12(4), 78-90.
COSO, C. (2017). Enterprise risk management integrating with strategy and performance. COSO, Retrieved on June 2, 2025, from https://www.coso.org/Documents/2017-COSO-ERM-Integrating-with-Strategy-and-Performance-Executive-Summary.pdf
Dai, J., & Vasarhelyi, M. A. (2017). Toward blockchain-based accounting and assurance. Journal of Information Systems, 31(3), 5–21.
Espinosa, V. I., & Pino, A. (2025). E-government as a development strategy: the case of Estonia. International Journal of Public Administration, 48(2), 86–99.
Fitriana, F., Saepudin, D., & Santoso, R. A. (2021). Fraud diamond theory detect financial statement fraud in manufacturing companies on the Indonesia Stock Exchange. International Business and Accounting Research Journal, 5(2), 93–105.
Hakami, T., Sabri, O., Al-Shargabi, B., Rahmat, M. M., & Nashat Attia, O. (2024). A critical review of auditing at the time of blockchain technology – a bibliometric analysis. EuroMed Journal of Business, 19(4), 1173–1201.
Handoyo, M., Roemkenya, B., & Bayunitri, B. I. (2021). The influence of internal audit and internal control toward fraud prevention. International Journal of Financial, Accounting, and Management, 3(1), 45-64.
Indasari, F., & Nafilah, A. N. (2025). Tinjauan pustaka: tantangan dan peluang implementasi audit berkelanjutan di era digitalisasi. Musytari : Jurnal Manajemen, Akuntansi, Dan Ekonomi, 20(8), 41–50.
Jensen, M. C., & Meckling, W. H. (2019). Theory of the firm: Managerial behavior, agency costs and ownership structure. In Corporate governance (pp. 77-132). Surrey: Gower.
Kim, K. J., & Lee, M. S. (2022). Blockchain technology and the creation of trust: focusing on transparency, immutability and availability. 한국컴퓨터정보학회논문지, 27(3), 79-90.
Koerniawan, I., & Wibowo, A. (2023). Blockchain technology in the perspective of public accounting in Indonesia. Accounting Information Systems and Information Technology Business Enterprise, 8(2), 106–120.
KPK. (2021). Laporan tahunan KPK 2021: Evaluasi sistem pengendalian internal di instansi Pemerintah. Komisi Pemberantasan Korupsi, Retrieved in June 1, 2025, from https://www.kpk.go.id/id/publikasi-data/laporan/laporan-tahunan
Lin, C. H., & Chen, W. H. (2023). A technology-organization-environment (toe) framework based on scientometry for understanding the risk factors in sustainable water resources management. Water Resources Management, 37(15), 5849–5869.
Lombardi, R., de Villiers, C., Moscariello, N., & Pizzo, M. (2022). The disruption of blockchain in auditing – a systematic literature review and an agenda for future research. Accounting, Auditing & Accountability Journal, 35(7), 1534–1565.
Lonto, M. P., Sukoharsono, E. G., Baridwan, Z., & Prihatiningtias, Y. W. (2023). The effectiveness of internal audit for fraud prevention. Australasian Accounting, Business and Finance Journal, 17(3), 371-380.
Oladejo, M. T., & Jack, L. (2020). Fraud prevention and detection in a blockchain technology environment: challenges posed to forensic accountants. International Journal of Economics and Accounting, 9(4), 315-335.
Puspita, A. C., & Gultom, Y. M. L. (2024). The effect of e-procurement policy on corruption in government procurement: Evidence from Indonesia. International Journal of Public Administration, 47(2), 117–129.
Rahman, K. G. (2020). Sistem pengendalian internal dan peran audit internal terhadap pencegahan kecurangan. BJRA, 3(1), 13-25.
Rahman, M. J., & Jie, X. (2024). Fraud detection using fraud triangle theory: evidence from China. Journal of Financial Crime, 31(1), 101–118.
Sari, N., Ghozali, I., & Achmad, T. (2017). The effect of internal audit and internal control system on public accountability: The emperical study in Indonesia state universities. International Journal of Civil Engineering and Technology, 8(9), 157–166.
Sholihah, R. A., & Anzwar, D. (2023). Moderasi moralitas individu pada pengaruh komitmen integritas, sistem pengendalian internal, peran audit internal, dan religiositas terhadap pencegahan kecurangan di BUMD Kota Pekalongan. JPA: Journal of Public Accounting, 3(1), 25-40.
Wagola, R., Nurmandi, A., Misran, & Subekti, D. (2023). Government digital transformation in Indonesia. Communications in Computer and Information Science, 1835(1), 286–296.
Wiraputra, M. R., Damayanti, F., & Haryono. (2025). Determination of fraud diamond theory in detecting fraud in financial reporting. Research Horizon, 5(4), 1401–1414.
Ziemba, E. W., Renik, K., Maruszewska, E. W., & Mullins, R. (2025). Blockchain adoption in auditing: A systematic literature review. Central European Management Journal, 2(2), 13-25.
Downloads
Published
How to Cite
Issue
Section
Categories
License
Copyright (c) 2025 Author (s)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
