Suggestions for Financing Companies

Oct 13, 2025 by windailys.com 54 views

The Influence of the Role of Internal Auditors and Internal Control on Company Performance through Preventing Fraud in Financing Companies Registered in the Indonesian Financing Company Association (APPI)

Introduction

The rapid development of the Indonesian economy has led to the growth of various sectors, including finance companies. As finance companies face increasingly complex challenges, one of which is the potential for fraud or fraud, it is essential to examine the effect of the role of internal auditors and internal control on the performance of finance companies. This study aims to investigate the influence of internal auditors and internal control on company performance through preventing fraud in financing companies registered in the Indonesian Financing Company Association (APPI).

Background

The Indonesian economy has experienced significant growth in recent years, leading to an increase in the number of finance companies. However, this growth has also led to an increase in the potential for fraud or fraud. According to the Indonesian Financing Company Association (APPI), the number of reported cases of fraud in finance companies has increased by 20% in the past year. This has led to a significant loss of trust among investors and customers, ultimately affecting the performance of finance companies.

Methodology

This study involved 53 finance companies registered in the Indonesian Financing Company Association (APPI), out of a total population of 70 companies. Primary data was collected through questionnaires distributed to internal auditors in the sample company. Data analysis was carried out using multiple linear regression methods for the first hypothesis, and path analysis for the second and third hypotheses, with the help of the SPSS program.

Results

The results of this study showed that:

The role of internal auditors, internal control, and prevention of fraud jointly has a significant effect on the performance of the company finance. This means that the three factors are interrelated and play an important role in determining the company's success.
The role of internal auditors and internal control separately also has a significant effect on company performance. This shows that these two factors have a direct impact on company performance.
The role of internal auditors and internal control has a significant effect on preventing fraud. This shows that the role of internal auditors and the application of effective internal control can minimize the risk of fraud.

Further Analysis

The results of this study underline the importance of the role of internal auditors and internal control in maintaining the integrity and performance of finance companies. The application of effective internal control, combined with the role of independent and professional internal auditors, can be a strong stronghold in preventing fraud and improving company performance.

Suggestions for Financing Companies

Based on the findings of this study, the following suggestions are made for financing companies:

Strengthening the role of internal auditors: Internal auditors must be given sufficient space and authority to carry out their duties independently and professionally.
Improving the quality of internal control: Implementation of internal control must be comprehensive, well documented, and carried out consistently by all employees.
Increasing Anti-Fraud Awareness: It is essential to build an anti-fraud culture within the company by conducting clear education, training, and application of the code of ethics.

Conclusion

This study provides valuable insights for financing companies, regulators, and other stakeholders in understanding the importance of the role of internal auditors and internal control in maintaining the integrity and performance of financing companies. The findings of this study highlight the need for finance companies to strengthen the role of internal auditors and improve the quality of internal control to prevent fraud and improve company performance.

Recommendations for Future Research

Based on the findings of this study, the following recommendations are made for future research:

Investigate the impact of internal auditors and internal control on company performance in different industries: This study focused on finance companies, but it would be beneficial to investigate the impact of internal auditors and internal control on company performance in different industries.
Examine the role of internal auditors and internal control in preventing fraud in other types of companies: This study focused on finance companies, but it would be beneficial to examine the role of internal auditors and internal control in preventing fraud in other types of companies.
Investigate the impact of internal auditors and internal control on company performance in different countries: This study focused on Indonesia, but it would be beneficial to investigate the impact of internal auditors and internal control on company performance in different countries.

Limitations of the Study

This study has several limitations, including:

Sample size: The sample size of this study was limited to 53 finance companies, which may not be representative of all finance companies in Indonesia.
Data collection method: The data was collected through questionnaires, which may not be the most effective method for collecting data on internal auditors and internal control.
Data analysis method: The data analysis method used in this study was multiple linear regression and path analysis, which may not be the most effective method for analyzing the data.

Conclusion

In conclusion, this study provides valuable insights into the influence of internal auditors and internal control on company performance through preventing fraud in financing companies registered in the Indonesian Financing Company Association (APPI). The findings of this study highlight the importance of internal auditors and internal control in maintaining the integrity and performance of finance companies.
Frequently Asked Questions (FAQs) about the Influence of Internal Auditors and Internal Control on Company Performance

Q: What is the role of internal auditors in preventing fraud?

A: Internal auditors play a crucial role in preventing fraud by conducting regular audits, identifying potential risks, and providing recommendations to management to improve internal controls. They also investigate any allegations of fraud and provide guidance on how to prevent it.

Q: What is internal control, and how does it relate to company performance?

A: Internal control refers to the policies, procedures, and processes that a company uses to ensure the accuracy, completeness, and reliability of its financial reporting. Effective internal control can help prevent fraud, ensure compliance with laws and regulations, and improve company performance.

Q: How can finance companies strengthen the role of internal auditors?

A: Finance companies can strengthen the role of internal auditors by providing them with sufficient space and authority to carry out their duties independently and professionally. This includes providing them with the necessary resources, training, and support to perform their duties effectively.

Q: What are some best practices for implementing internal control?

A: Some best practices for implementing internal control include:

Establishing clear policies and procedures
Conducting regular audits and reviews
Providing training and education to employees
Implementing a code of ethics and conduct
Establishing a whistleblower policy

Q: How can finance companies improve the quality of internal control?

A: Finance companies can improve the quality of internal control by:

Conducting regular risk assessments
Implementing a robust audit committee
Providing training and education to employees
Establishing a code of ethics and conduct
Conducting regular reviews and assessments of internal control

Q: What is the impact of internal auditors and internal control on company performance?

A: The impact of internal auditors and internal control on company performance is significant. Effective internal control can help prevent fraud, ensure compliance with laws and regulations, and improve company performance. It can also help to build trust with stakeholders, including investors and customers.

Q: How can finance companies increase anti-fraud awareness?

A: Finance companies can increase anti-fraud awareness by:

Conducting regular training and education programs
Establishing a code of ethics and conduct
Implementing a whistleblower policy
Providing regular updates and reminders to employees
Conducting regular risk assessments and audits

Q: What are some common mistakes that finance companies make when implementing internal control?

A: Some common mistakes that finance companies make when implementing internal control include:

Not establishing clear policies and procedures
Not providing sufficient training and education to employees
Not conducting regular audits and reviews
Not establishing a code of ethics and conduct
Not providing a whistleblower policy

Q: How can finance companies ensure that their internal control is effective?

A: Finance companies can ensure that their internal control is effective by:

Conducting regular risk assessments and audits
Implementing a robust audit committee
Providing training and education to employees
Establishing a code of ethics and conduct
Conducting regular reviews and assessments of internal control

Q: What are some benefits of having effective internal control?

A: Some benefits of having effective internal control include:

Improved company performance
Reduced risk of fraud and non-compliance
Increased trust with stakeholders
Improved reputation and credibility
Better decision-making and risk management

Q: How can finance companies measure the effectiveness of their internal control?

A: Finance companies can measure the effectiveness of their internal control by:

Conducting regular risk assessments and audits
Implementing a robust audit committee
Providing training and education to employees
Establishing a code of ethics and conduct
Conducting regular reviews and assessments of internal control

Q: What are some common challenges that finance companies face when implementing internal control?

A: Some common challenges that finance companies face when implementing internal control include:

Limited resources and budget
Lack of expertise and knowledge
Resistance to change and implementation
Difficulty in establishing clear policies and procedures
Difficulty in measuring the effectiveness of internal control