The Mediation Role of Community Participation on Factors Influencing Fraud Prevention in Village Financial Management

Abstract

This study aims to analyze and provide empirical evidence on the mediating role of community participation in factors that affect fraud prevention such as the competence of village officials, transparency, accountability, and individual morality in village financial management. This research was carried out in 83 villages located in Buton Regency, Southeast Sulawesi Province. The research sample amounted to 415 people through a sampling technique using proportionate stratified random sampling with sampling units, namely the village head, village secretary, finance head, and the Village Consultative Body. The research data was collected through a questionnaire and analyzed by testing the mediation effect using WarpPLS 5.0 software. The results of the study show that the competence of village officials, transparency, accountability, and community participation have a direct influence on fraud prevention, while individual morality has no direct or indirect influence on fraud prevention. The testing of the mediation effect was met by three mediation pathways and one pathway was found to have no mediating effect. The implications of this study show that community participation is a mediating variable in the determinants of fraud prevention. This condition confirms the active involvement of the community as a social control mechanism in fraud prevention. Therefore, fraud prevention in village financial management requires an approach that is not only system-based, but also based on public participation and supervision.

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