Enhancing Internal Control and Fraud Investigation Literacy among Pet Shop Entrepreneurs in Batu City

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FORMOSA NEWS - Surabaya - Batu City Pet Shops Facing Cash Leakage and Inventory Shrinkage Receive Vital Internal Control Upgrade. A community development study conducted by researchers from Universitas Bhayangkara Surabaya has successfully addressed critical financial vulnerabilities among small retail and service-oriented pet shops in Batu City. Published in mid-2026, the initiative led by Dien Ajeng Fauziah, Muhammad Habibie Al Hamzah, Fitriyah Kusuma Devi, Elly Yuniar Nitawati, Nurul Iman from Universitas Bhayangkara Surabaya tackled widespread operational risks such as cash leakage and inventory shrinkage. This intervention is vital because local pet shops handle high-turnover inventory and frequent cash transactions, making them highly susceptible to undetected internal fraud if they lack basic forensic accounting literacy.

High-Turnover Retail Vulnerable to Informal Bookkeeping
Batu City serves as a dynamic pillar of the local Indonesian economy, hosting a large share of micro, small, and medium enterprises (MSMEs) that drive regional development. Within this thriving retail node, the pet shop segment has grown significantly. However, these small business operators frequently encounter severe maturity gaps between their busy day-to-day operations and formal accounting practices. Prior to the intervention by Universitas Bhayangkara Surabaya, many pet shops in the region operated with inadequate internal controls. Business owners routinely mixed personal and business finances, maintained inconsistent sales records, and rarely conducted regular stock verifications. Traditional accounting models often feel too rigid or complex for small business owners. Consequently, weak internal oversight created pervasive opportunities for minor transaction manipulations, asset misappropriation, procurement irregularities, and direct cash theft, which silently eroded tight profit margins.

Hands-On Fraud Simulations Replace Complex Accounting Jargon
To bridge this literacy gap, the research team from Universitas Bhayangkara Surabaya implemented a practical, participatory action research framework. The team avoided overly technical financial jargon, choosing instead to translate complex forensic accounting concepts into straightforward, operational habits. The program was executed in three distinct phases:

• Baseline Diagnostic Audit: The researchers analyzed current record-keeping methods, observed cash handling, and mapped out specific transaction vulnerabilities within the participating shops.
  
• Interactive Fraud Simulations: Business owners, cashiers, and managers participated in realistic, in situ scenario exercises. They practiced identifying red flags associated with common retail fraud, including cash skimming, fake customer refunds, supplier invoice manipulation, and inventory concealment.
  
• Longitudinal Impact Evaluation: Following the training modules, the researchers monitored the enterprises for three months to track how consistently the owners maintained the defensive protocols.
  

Measurable Upgrades in Financial Literacy and Fraud Detection
The targeted intervention by the Universitas Bhayangkara Surabaya researchers yielded immediate and measurable improvements in business governance. Quantitative pre-test and post-test comparisons confirmed a substantial shift in the participants' operational capabilities. Qualitative feedback gathered during the follow-up period verified that participants could confidently establish clear separation of duties, standardize daily transaction documentation, and perform disciplined cash-to-sales reconciliations.

Real-World Impact on Small Business Sustainability
The outcomes of this program demonstrate that safeguarding a small retail business against fraud does not depend on expensive, complex software systems. Instead, long-term business resilience begins with structured, lightweight governance habits. By mastering these basic forensic tools, pet shop entrepreneurs in Batu City can prevent internal capital drain and stabilize their cash flows. Furthermore, cleaner financial statements and reliable data quality directly strengthen the bargaining position of these small businesses. Well-documented operations allow local entrepreneurs to build trust with formal banking institutions and modern financial technology (fintech) lenders, unlocking easier access to credit for business expansion. Reflecting on the study's broader social implications, the research team highlighted that while operational workloads can challenge consistent documentation, leadership commitment transforms these tools into lasting habits. Dien Ajeng Fauziah of Universitas Bhayangkara Surabaya noted that fraud prevention in micro-retail environments succeeds when defensive tools are fully customized to match the unique, fast-paced daily routines of the local shop floor.

Author Profiles
Dien Ajeng Fauziah is a lead researcher and faculty member at Universitas Bhayangkara Surabaya, specializing in forensic accounting, fraud investigation techniques, and small business internal control systems.
Co-Authors: Muhammad Habibie Al Hamzah, Fitriyah Kusuma Devi, Elly Yuniar Nitawati, and Nurul Iman are academic collaborators at Universitas Bhayangkara Surabaya dedicated to MSME financial literacy and community economic empowerment.

Source

Dien Ajeng Fauziah, Muhammad Habibie Al Hamzah, Fitriyah Kusuma Devi, Elly Yuniar Nitawati, dan Nurul Iman. Enhancing Internal Control and Fraud Investigation Literacy among Pet Shop Entrepreneurs in Batu City. Asian Journal of Community Services (AJCS). Vol. 5, No. 6, Halaman 317-332.
DOI: https://doi.org/10.55927/ajcs.v5i6.30
URL: https://journalajcs.my.id/index.php/ajcs