Is it suitable for your local governments? A contingency theory-based analysis on the use of internal control in thwarting white-collar crime
ISSN: 1359-0790
Article publication date: 11 March 2020
Issue publication date: 14 March 2022
Abstract
Purpose
The purpose of this study is to extend existing theory by developing a contingency theory for the public sector and to provide a landscape for local government to deal with white-collar crime. In recent years, the theme of risk management and internal controls, which is popular in the industry and private sector, has been mirrored by public sector organisations. Of course, it is to improve fraud risk control systems. We have to accept that public sector organisations have a growing need to control the (fraud) risks in a rapidly changing economic environment. Within this situation an effective internal control is becoming strategically important in many organisations, as it is proving to be a cost-efficient way to manage these risks in everyday operations. Here, the authors conducted a case study on the risk management control system at an Indonesian local government.
Design/methodology/approach
This study uses mixed methods, integrating quantitative and qualitative data – in-depth interviews and questionnaires were required to address the social phenomenon being investigated.
Findings
This study found that the structure of the control system fits a generic model, in which control systems are fundamental factors to all departments. It shows that control systems can support managers to align employee capabilities, activities and performance with the organisation’s goals and missions. In addition, the authors could identify, risk assessment and monitoring activities are effective measures of controlling organisation’s activities, and potentially could diagnose potential (fraud) risks, deterring to the achievement of organisational aims. Ideally, those aspects should be performed on a continuous basis if organisations want to prevent the spread of numerous potential menaces. In other words, if an organisation fails to carry out risk assessment correctly, it will result in unidentified possibility of fraud risks. The more explicit the risk assessment, the more effective the detection of fraud.
Practical implications
It can be alternative to consider Committee of Sponsoring Organizations of the Treadway Commission’s internal control as fraud mitigation in local government.
Originality/value
This study offers new directive discussion about internal controls as notion of fraud mitigation.
Keywords
Acknowledgements
Retraction notice: The publishers of Journal of Financial Crime wish to retract the article “Corruption as distinct crime: the need to reconceptualise internal control on controlling bureaucratic occupational fraud” by A. Maulidi and J. Ansell which appeared in Volume 29, Issue 2, 2022.
It has come to our attention that statistical errors are present within the article and therefore the findings cannot be relied upon.
As part of an investigation into the article’s findings, the authors were requested to provide a copy of the dataset so that the editorial team could verify the findings. The authors were unable to provide the dataset and stated they had committed statistical errors. The authors would like to note that any wrongdoing was unintentional.
This article has been retracted at the authors’ request.
The author guidelines of the Journal of Financial Crime make it clear that submitted articles must include data free from errors that may affect the understanding of the article.
The journal sincerely apologises to its readers.
Citation
Shonhadji, N. and Maulidi, A. (2022), "Is it suitable for your local governments? A contingency theory-based analysis on the use of internal control in thwarting white-collar crime", Journal of Financial Crime, Vol. 29 No. 2, pp. 770-786. https://doi.org/10.1108/JFC-10-2019-0128
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited