Auditor Competence and Judgment Boost Fraud Disclosure at Indonesia’s Audit Board
A 2026 study published in the International Journal of Asian Business and Management finds that auditor competence and professional judgment significantly strengthen fraud disclosure within Indonesia’s public sector. The research was conducted by Irwansyah of Universitas Bengkulu and focused on auditors at the Audit Board of the Republic of Indonesia (BPK RI) Bengkulu Province Representative Office. The findings matter as Indonesia continues to confront high-profile corruption cases and growing public demand for transparent financial oversight.
The study, received in December 2025 and accepted in February 2026, highlights how the quality of auditors directly affects the ability of government institutions to uncover fraud. At a time when corruption scandals have involved major state-linked entities and regional governments, strengthening internal audit capacity has become a national priority.
Why Fraud Disclosure Matters
Fraud in public finance affects taxpayers, public services, and national development. Indonesia has faced multiple corruption scandals over the past decade, ranging from state-owned enterprises to regional government agencies. These cases have fueled skepticism about whether audits are rigorous enough to detect financial manipulation early.
The Audit Board of Indonesia, known as Audit Board of the Republic of Indonesia (BPK RI), is constitutionally mandated to examine state financial management. Its regional offices, including Bengkulu, serve as the frontline institutions in detecting misuse of public funds.
In 2023 alone, the Bengkulu Representative Office identified 29 fraud cases. This backdrop makes auditor performance a critical factor in preventing further financial losses.
How the Research Was Conducted
Irwansyah used a quantitative descriptive approach to analyze the relationship between auditor competence, professional judgment, and fraud disclosure.
The study involved:
- 50 auditors employed at BPK RI Bengkulu Province
- 40 auditors selected as respondents based on availability and experience
- Primary data collected through structured questionnaires
- Statistical analysis using multiple linear regression with SPSS
The research design allowed the author to test whether higher levels of competence and professional judgment lead to stronger fraud disclosure outcomes.
Key Findings
The results show a clear and statistically significant impact from both variables:
1. Auditor Competence Improves Fraud Disclosure
- Regression coefficient: 0.129
- Significance value: 0.048
- Conclusion: Accepted
Auditors with stronger education, training, and professional experience are more capable of identifying and reporting fraud. Each measurable increase in competence correlates with improved fraud disclosure performance.
2. Professional Judgment Has an Even Stronger Effect
- Regression coefficient: 0.312
- Significance value: 0.039
- Conclusion: Accepted
Professional judgment shows a higher coefficient than competence, indicating that analytical reasoning, ethical decision-making, and risk evaluation skills play an even larger role in exposing fraud.
The statistical tests confirmed that the survey instruments were valid and reliable. Classical assumption tests also showed no multicollinearity and normally distributed data, strengthening the credibility of the findings.
Why Professional Judgment Cannot Be Replaced
The study emphasizes that professional judgment involves applying knowledge, ethics, and experience to make appropriate audit decisions in complex situations. This human element remains irreplaceable.
In public discussions at Gadjah Mada University, senior accounting professionals have argued that professional judgment cannot be substituted by machines. Technology may assist auditing, but the interpretation of irregularities and fraud indicators requires ethical reasoning and contextual understanding.
Irwansyah explains that competent auditors are better equipped to analyze evidence and interpret behavior patterns linked to fraud. Professional judgment strengthens this ability by improving how auditors evaluate intent, risk, and financial anomalies.
Theoretical Insight: Attribution Theory
The research uses attribution theory to explain auditor behavior. Attribution theory examines how individuals interpret the causes of actions—whether they are driven by internal motives or external pressures.
In auditing, this perspective helps explain how auditors interpret suspicious transactions. A skilled auditor evaluates whether irregularities stem from error, negligence, or deliberate fraud. Strong professional judgment improves this evaluative process.
Implications for Public Sector Governance
The findings carry practical implications for Indonesia’s financial oversight system:
- Training Investment: Continuous professional education for auditors directly enhances fraud detection capacity.
- Judgment Development: Institutions should focus on analytical thinking, ethical reasoning, and case-based learning.
- Institutional Trust: Better fraud disclosure increases public confidence in financial reporting.
- Policy Reform: Strengthening auditor capacity should be central to anti-corruption policy.
The results reinforce the idea that differences in auditor skill levels can determine whether fraud is uncovered or overlooked.
As Irwansyah of Universitas Bengkulu states in the study, strengthening auditor competence and professional judgment is essential to improve audit transparency and stakeholder confidence.
Author Profile
Irwansyah, M.Acc.Universitas Bengkulu, Indonesia
Source
DOI: https://doi.org/10.55927/ijabm.v5i1.1
Official URL : https://journalijabm.my.id/index.php/ijabm/index
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