INTEGRATION OF INTERNAL AUDIT, ELECTRONIC AUDIT, AND AUDIT GOVERNANCE IN IMPROVING THE EFFECTIVENESS OF INTERNAL CONTROL AND REDUCING THE RISK OF FRAUD
Jul 2026· Multidisciplinary Indonesian Center Journal (MICJO)· Vol 3, pp. 3245-3254· 0 citations· 18 references
TL;DR
The results show that independent internal audit, the use of electronic audit technologies such as Big Data Analytics and Blockchain, and audit governance through Whistleblowing Systems and AI Governance have a synergistic relationship in strengthening organizational oversight systems.
Abstract
Digital transformation has increased the complexity of fraud risks within organizations, necessitating a more adaptive and integrated internal control system. This study aims to analyze the integration of internal audit, electronic audit, and audit governance in improving the effectiveness of internal control and mitigating fraud risks. This study uses a Systematic Literature Review (SLR) approach by analyzing various scientific literature relevant to the research topic. The results show that independent internal audit, the use of electronic audit technologies such as Big Data Analytics and Blockchain, and audit governance through Whistleblowing Systems and AI Governance have a synergistic relationship in strengthening organizational oversight systems. The integration of these three aspects can improve the effectiveness of fraud detection, maintain the integrity of audit data, and strengthen organizational transparency and accountability. This study provides a conceptual contribution in the form of a digital-based integrated oversight model as a strategy for strengthening internal control in the era of digital transformation.
Fraud remains one of the most significant threats to organizational performance, accountability, and long-term sustainability across both public and private sectors. Despite considerable investments in internal control systems, organizations continue to experience financial losses resulting from fraudulent activities such as financial statement manipulation, procurement fraud, cybercrime, and asset misappropriation. In response to these challenges, internal auditing has evolved beyond its traditional compliance role to become a strategic governance mechanism for risk management and fraud prevention. This paper reviews existing theoretical and empirical literature on the relationship between internal audit quality and fraud detection effectiveness in the manufacturing, banking, and oil and gas sectors. Drawing on Agency Theory, Fraud Triangle Theory, and Institutional Theory, the study examines how factors such as auditor independence, professional competence, technological capability, and regulatory compliance influence organizations' ability to detect and prevent fraud. The review further highlights how industry-specific characteristics shape the effectiveness of internal audit functions and fraud management practices. The findings indicate that organizations with strong internal audit systems are generally more successful in identifying control weaknesses, detecting fraudulent activities, and enhancing overall governance performance. While the banking sector demonstrates relatively higher fraud detection effectiveness due to advanced technology and strict regulatory oversight, the oil and gas sector faces persistent governance challenges despite significant audit investments. Manufacturing firms, on the other hand, continue to grapple with operational vulnerabilities associated with inventory management and procurement processes. By providing a comparative synthesis across multiple sectors, this study extends existing literature that has largely focused on single-industry investigations. The paper concludes that strengthening auditor independence, embracing technological innovation, and investing in continuous professional development are essential for improving fraud detection effectiveness and promoting organizational accountability.
Adesina Olugoke Oladipupo, Ajabor Azuka Elvis· JALINGO JOURNAL OF SOCIAL AN...· 0 citations
This research aims to explore the contribution of digital transformation governance to enhancing the reliability of financial reports. This is achieved through an analytical study of the opinions of a sample of employees in the accounting, auditing, and internal control departments of the General Directorate of Education in Al-Qadisiyah, with a sample size of (50) individuals. The research problem lies in the need to enhance the quality and reliability of financial reports in light of digital transformation applications. The problem is formulated through the main question: What is the contribution of digital transformation governance to enhancing the reliability of financial reports? The research included two main variables: the independent variable, digital transformation governance, consisting of six dimensions (relevance and appropriateness, truth and integrity, ease of understanding, timeliness, credibility, and comparability), and the dependent variable, the reliability of financial reports. A one-dimensional scale consisting of (10) items was adopted. To achieve the research objectives, the descriptive-analytical method was used, relying on a questionnaire to collect data on the study variables. The data were analyzed using various statistical methods, including the arithmetic mean, standard deviation, and Pearson correlation coefficient, using the statistical software (SPSS.v29 and AMOS.v29). The preliminary results showed a positive and statistically significant relationship between digital transformation governance and the reliability of financial reports, indicating that strengthening the six dimensions of digital governance contributes to raising the level of reliability of financial information in the two sections of the research sample.
Saif Ali· Jurnal Akuntansi, Manajemen,...· 0 citations
The purpose of this research is to create a thorough conceptual framework for comprehending and dealing with accounting and auditing fraud. The study intends to uncover important theme areas that support fraud prevention, detection and mitigation in different disciplines by synthesizing recent academic research.
A systematic literature review was conducted using the SCOPUS database, covering research articles from 2010 to 2025. A total of 83 open access articles related to accounting and auditing fraud were analyzed. The review focused on key categories including author, year, main contribution, field, research method and analysis, and was thematically structured around technological advancements, governance mechanisms and ethical dimensions.
The review reveals that technological innovations such as machine learning, big data analytics and blockchain significantly enhance fraud detection and audit quality. However, their effectiveness is contingent upon strong corporate governance and ethical standards. Board oversight, auditor independence and forensic auditing play vital roles in mitigating fraud risks. In addition, ethical behavior, psychological well-being and auditor characteristics are critical human factors that influence the effectiveness of audit practices.
The review is limited to open-access articles within the SCOPUS database and may not capture all relevant studies outside this scope. Future research could expand to include other databases or non-open-access literature to broaden the understanding of the topic.
The findings emphasize the need for organizations to integrate advanced technological tools with robust governance frameworks and to foster ethical cultures. Auditor training should include technological competencies and psychological awareness to enhance audit effectiveness and fraud detection.
This study offers a multidimensional conceptual framework that integrates technological, organizational and behavioral factors, providing comprehensive insights into the mechanisms driving audit quality and fraud detection. It contributes to the academic discourse and offers practical guidance for practitioners and policymakers aiming to improve auditing standards in the digital era.
Arbana Sahiti Ramushi, Lum Çollaku· International Journal of Eth...· 0 citations
Contemporary transformations within the international internal auditing framework increasingly emphasize governance efficiency, institutional responsibility, and sustainable managerial development. The adoption of the Global Internal Audit Standards reflects the increasing strategic integration of internal auditing within modern governance systems and highlights the growing importance of this function in supporting managerial coordination, institutional accountability, and organizational sustainability. This development generates the necessity to examine how the contemporary professional framework redefines the positioning, responsibilities, and strategic contribution of internal auditing within modern organizations. In this regard, particular attention is directed toward understanding how the revised formulation of the purpose of internal auditing influences governance strengthening and the broader perception of the internal audit function. The aim of the research is to analyze the conceptual innovation in the purpose of internal auditing introduced by the Global Internal Audit Standards (2025) and to assess its implications for organizational governance. The research is based on documentary analysis of the international regulatory framework in the field of internal auditing, using methods of conceptual analysis, comparison, and interpretation of the evolution of professional standards. The findings suggest that the contemporary professional framework considerably expands the understanding of internal auditing beyond traditional compliance-related activities, positioning this function as an important component of governance effectiveness, adaptive risk responsiveness, and long-term institutional development. In the context of the ongoing evolution of the internal auditing profession in the Republic of Moldova, this professional reorientation may support a clearer understanding of the contribution of internal auditing to accountability, managerial transparency, and the improvement of governance practices within the public sector
Lidia Tonu· Development Through Research...· 0 citations
This study aims to examine the effects of audit risk, operational complexity, and internal control systems on audit quality. High audit risk and increasingly complex business operations present significant challenges for auditors in obtaining sufficient and appropriate audit evidence, while effective internal control systems are expected to improve the reliability of financial reporting and support higher-quality audit outcomes. A quantitative research approach with an explanatory design was employed. Secondary data were collected from annual reports and audited financial statements of companies listed on the Indonesia Stock Exchange during the 2020–2024 period. The sample was selected using purposive sampling based on predetermined criteria. Data analysis was conducted using descriptive statistics, classical assumption tests, multiple linear regression analysis, t-tests, F-tests, and the coefficient of determination. The findings indicate that audit risk has a significant negative effect on audit quality, suggesting that higher audit risk increases the likelihood of material misstatements and reduces audit effectiveness. Operational complexity also has a significant negative effect on audit quality because diversified business activities require broader audit procedures and greater professional judgment. Conversely, internal control systems have a significant positive effect on audit quality by improving the reliability of financial information and reducing control risk. Furthermore, audit risk, operational complexity, and internal control systems simultaneously have a significant influence on audit quality. These findings highlight the importance of comprehensive risk assessment, effective internal control implementation, and appropriate audit planning in enhancing audit quality. The study contributes to the auditing literature by providing empirical evidence regarding the combined effects of organizational and audit-related factors on audit quality in publicly listed companies.
S. Sukmono· International journal of man...· 0 citations
Public procurement is one of the sectors with a high risk of fraud due to the complexity of procedures, the involvement of multiple stakeholders, and the large amount of public funds managed. Therefore, the role of Government Internal Supervisory Apparatus (APIP) is essential in strengthening internal control systems and preventing irregularities in procurement processes. This study aims to analyse the role of APIP in fraud control in public procurement within the Kediri City Government. The study employs a qualitative approach using in-depth interviews, observations, and document analysis related to internal supervision activities. The findings reveal that APIP plays a significant role in fraud control through preventive, detective, and corrective supervisory functions. The effectiveness of APIP supervision is influenced not only by formal audit mechanisms but also by the quality of internal control systems, the competence of internal auditors, and the use of technology in the auditing process. This study also develops a conceptual model of APIP supervisory processes in controlling procurement fraud, highlighting the importance of systematic supervision from risk-based planning to monitoring the implementation of audit recommendations. The findings provide practical implications for local governments to strengthen APIP capacity through auditor competency development, strengthening internal control systems, and integrating audit technologies to enhance supervisory effectiveness and support the implementation of good governance.
