The Strategy to Optimize the Role of Government Internal Supervisory Apparatus (APIP) in Procurement Fraud Risk Management in Industry 4.0

Abstract

Many challenges confront the efforts to build procurement fraud risk management in Industry 4.0. This study aims to assess the risk of procurement fraud in industry 4.0 and disclose strategies to optimize the role of internal auditors in mitigating these risks. The mixed-method has been conducted with data on procurement fraud risks generally accepted by government agencies. A survey involving 140 respondents and interviews with five experts have been completed. The risk assessment in the research findings involved seven procurement fraud risks, with "collusion between providers in e-tendering" ranking the highest. Procurement management must detect and prevent fraud by creating anti-hacker applications, conducting data analytics on business ownership, and ongoing monitoring. Internal auditors must undertake fraud prevention by improving their ability in data analytics, encouraging probity plans, and procurement assistance. Fraud detection is carried out through performance audits using computer-assisted audit techniques, probity audits, information technology governance audits, continuous audits, data analytics, and internal auditor integrity assessments through surveys to the auditee.

Collusion Fraud Risk Mitigation with Integration of Data Analytics in E-Tendering

“…Normative study is carried out by referring to regulations related to research objects. Prospective study is used for risk analysis in tender collusion (Kamal & Elim, 2021). Meanwhile, retrospective study is carried out through an analysis of the 2021 and 2022 KPPU legal decisions related to the tender collusion on the website; Salinan Putusan Perkara 25-KPPU-I-2020.pdf.…”

“…Tender collusion is part of the integrity risk in the procurement process (OECD, 2016). To detect the risk of fraud in the form of collusion, procurement management can apply machine learning (ML) (García Rodríguez et al, 2022) and data analytics in e-tendering (Kamal & Elim, 2021). There are two data analytics techniques that can be used: statistical techniques and visualization techniques (CAGI, 2017) which can be applied to descriptive, diagnostic, predictive, and prescriptive analysis (principa.co, 2017).…”

“…Tender collusion is also part of the fraud risks in procurement with the highest level (Kamal & Elim, 2021) ). There is also a policy mandate for the use of information technology in the procurement of goods/services.…”

Optimasi Penerapan Data Analytics Untuk Akselerasi Tranformasi Digital di Lembaga Pelatihan

“…Auditor internal harus mendukung "add value" dan "improve operations" manajemen risiko dan pengendalian intern di bisnis auditi (Anderson et al, 2017) yang sudah serba big data (Wibowo, 2020). Bahkan, kompetensi penggunaan data analytics sangat dibutuhkan oleh auditor dalam pencegahan dan pendeteksian risiko fraud pengadaan di era digital (Kamal & Elim, 2021). Sehingga auditor internal pun dituntut untuk melakukan tranformasi digital dalam tugas pengawasannya (Asad et al, 2019), antara lain meningkatkan kompetensi penggunaan data analytics (Kamal & Elim, 2021;Oktorialdi, 2019).…”

“…Bahkan, kompetensi penggunaan data analytics sangat dibutuhkan oleh auditor dalam pencegahan dan pendeteksian risiko fraud pengadaan di era digital (Kamal & Elim, 2021). Sehingga auditor internal pun dituntut untuk melakukan tranformasi digital dalam tugas pengawasannya (Asad et al, 2019), antara lain meningkatkan kompetensi penggunaan data analytics (Kamal & Elim, 2021;Oktorialdi, 2019).…”