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Archives of Business Research – Vol. 9, No. 6
Publication Date: June 25, 2021
DOI:10.14738/abr.96.10385. Sutrisno, E. R., Tewal, B., Lengkong, V. P. K., & Sendow, G. M. (2021). The Influence of Morality, Organizational Commitment, and
Appropriate Compensation on the Intention of Fraud Study on Public Services in the Investment Sector at the Office of Investment
and One Stop Integrated Services (DPMPTSP) of North Sulawesi Province Indonesia. Archives of Business Research, 9(6). 234-241.
Services for Science and Education – United Kingdom
The Influence of Morality, Organizational Commitment, and
Appropriate Compensation on the Intention of Fraud
Study on Public Services in the Investment Sector at the Office of
Investment and One Stop Integrated Services (DPMPTSP) of
North Sulawesi Province Indonesia
Ellen R. Sutrisno
Doctoral Program in Management
Faculty of Economics and Business University of Sam Ratulangi
Bernhard Tewal
Faculty of Economics and Business, University of Sam Ratulangi
Victor P. K. Lengkong
Faculty of Economics and Business, University of Sam Ratulangi
Greis M. Sendow
Faculty of Economics and Business, University of Sam Ratulangi
ABSTRACT
The objective of this research is to observe the factors that influence the intention
to commit fraud in the process of public service investment by focusing on the
variables of morality, organizational commitment, and suitability of compensation
as dependent variables and intention to commit fraud as independent variable. The
study was conducted at the Investment and One Stop Service Office North Sulawesi
Province by using quantitative methodology. Data was collected using a
questionnaire and then processed by linear regression analysis. The research
results showed that morality, organizational commitment and compliance
compensation have a negative effect on the intention to commit fraud in the field of
public service investment process in the Department of Investment and the One
Stop Service Office North Sulawesi Province.
Keywords: Fraud, Morality, Organizational Commitment, Compatibility, Investment
INTRODUCTION
Discussing corruption in Indonesia is the same as discussing unpublished paths. where to start
and where to ends. From the Old Order regime to the New Order to the current Reformation
Order, the corrupt behavior of “rogue elements” is decreasing and decreasing but is becoming
more rampant.
According to Word Economic Forum (WEF) study, rampant corruption is the main obstacle to
investment in Indonesia. WEF places corruption with the highest score, which is 13.8, as the
main factor hindering investment in Indonesia. This is because of the rampant practices of
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Sutrisno, E. R., Tewal, B., Lengkong, V. P. K., & Sendow, G. M. (2021). The Influence of Morality, Organizational Commitment, and Appropriate
Compensation on the Intention of Fraud Study on Public Services in the Investment Sector at the Office of Investment and One Stop Integrated Services
(DPMPTSP) of North Sulawesi Province Indonesia. Archives of Business Research, 9(6). 234-241.
URL: http://dx.doi.org/10.14738/abr.96.10385
bribery, gratification, favoritism, and facilitation by several individuals, especially in licensing
arrangements.
Various efforts have been made to eradicate corruption. The President has established the
Corruption Eradication Commission (KPK) an independent institution that specifically handles
corruption cases in this country. Although the KPK has been established in an effort to prevent
corruption, in this country it still exists at various levels and its quantity has not decreased
much, both on a small and large scale, ranging from ordinary people to high-ranking officials.
In fact, fraud can harm state finances. Perpetrators of fraud are usually carried out by
unscrupulous leaders and employees who work in a place where he works, and even the
perpetrators are people who operate the agency's operating system and also run the internal
control system. Fraud will be difficult to detect, if it is carried out by the
leadership/management compared to that committed by employees. The question that often
arises is, why does fraud occur? The simple answer to the main cause of fraud, as Tuankotta
(2010) is: "corruption (read: fraud) by need, by greed and by opportunity". In addition, based
on observations, several possible causes of official interactions in fraudulent acts are an
uncomfortable and unpleasant work environment, for example treating employees unfairly,
communication in a closed manner and the absence of a mechanism for submitting complaints,
not measuring performance and rewards, so that employees feel that they are not being treated
fairly, there is no employee consultation assistance, to find out problems early, the hiring
process is unfair, as well as carelessness.
It is important to examine the root causes of fraud, firstly because of the many cases of
corruption that ultimately hinder the running of the government, so that the goal of
development itself, namely the welfare of society will never be achieved. For example, it was
found that development funds intended for basic infrastructure and public services were
neglected because these funds were misused by the officials concerned. Finally, the service to
the community is not optimal. This also tarnishes the community's sense of justice and
therefore anyone who is proven to have violated it must be dealt with as a lesson to the person
concerned and other officials (progressive approach). The second thing is how to make efforts
so that any official as early as possible does not make the same mistake (preventive approach).
There are many factors that can influence people to intend to commit fraud. However, in this
study the researchers took the following factors: morality based on research Ariani (2014),
Puspasari (2012), and Wilopo (2006) then organizational commitment based on research from
Adinda et al (2015) and the last is the suitability of compensation based on research from
Thoyibatun (2009). Furthermore, these three factors will be tested for their influence on the
intention to commit fraud at the Office of the Investment and One Stop Service (DPMPTSP)
Office of North Sulawesi Province.
The main question in this research are: does morality have a negative effect on employee
intentions to commit fraud at the Office of the Investment and One Stop Service (DPMPTSP)
North Sulawesi Province? Does organizational commitment have a negative effect on employee
intentions to commit fraud at the Office of the Investment and One Stop Service (DPMPTSP)
North Sulawesi Province? And does the suitability of compensation have a negative effect on
employee intentions to commit fraud at the Office of the Investment and One Stop Service
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Services for Science and Education – United Kingdom
(DPMPTSP) North Sulawesi Province? how the influence of fiscal policy, specifically the
allocation of deconcentrated funds to environmental quality conditions? The objectives of this
reesearch are (1) to analyze the negative effect of morality on employee intentions to commit
fraud Provincial Office of Investment and One Stop Integrated Services (DPMPTSP)SP North
Sulawesi, (2) to analyze the negative effect of organizational commitment on employee
intentions to commit fraud at the Office of the Investment and One Stop Service (DPMPTSP)
Office of North Sulawesi Province, and to analyze the negative effect of compensation suitability
on employee intentions to commit fraud at the Office of the Investment and One Stop Service
(DPMPTSP) North Sulawesi Province.
LITERATURE REVIEW
Fraud
The definition of fraud according to Karyono (2013) fraud can be termed as fraud which
contains the meaning of a deviation and unlawful act (illegal act), that is done intentionally for
a specific purpose, such as deceiving or giving mislead to other parties, made by good people
from within and from outside the organization. Fraud is designed to take advantage of
opportunities dishonestly, which directly or indirectly harms other parties. Meanwhile, the
fraud triangle theory or the fraud triangle was first developed by Cressey (1940) as an idea that
examines the causes of fraud (Husaini, 2009). The fraud triangle theory as in the picture above
explains 4 that fraud is caused by three factors, namely: opportunity, pressure, justification
(rationalization).
Morality
Morality is the principle that individuals and groups follow about what right and wrong by
moral standards. Individual morality is behavior and a good attitude, where someone is selfless
or does not ask for anything in return (Udayani and Sarin, 2017). It was further stated by
Udayani and Sarin, (2017) that morality occurs when people take the good because they are
aware of their obligations and responsibility and not because he is seeking profit. This can be
interpreted that individual morality is a good attitude and behavior, where a person does not
asking in return or selflessly.
Organizational Commitment
Steers (1985) in Adinda and Ikhsan (2015), defines organizational commitment as a sense of
identification (belief in organizational values), involvement (willingness to try their best in the
interests of the organization) and loyalty (the desire to remain a member of the organization
concerned) declared by an employee to his organization. According to Najahningrum (2013),
organizational commitment shows one's acceptance of the values and goals of the organization.
The attitude taken by employees related to the achievement of company goals shows how much
the employee's commitment to the organization where he works.
Compensation Suitability
Hasibuan (2017) states that compensation is a term related to financial rewards received by
people through their employment relationship with an organization. Compensation Suitability
is suitability and satisfaction of employees / employees / workers for what is given by the
agency to they are in the form of hourly wages and periodic salaries in return for work
that has been done.
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Sutrisno, E. R., Tewal, B., Lengkong, V. P. K., & Sendow, G. M. (2021). The Influence of Morality, Organizational Commitment, and Appropriate
Compensation on the Intention of Fraud Study on Public Services in the Investment Sector at the Office of Investment and One Stop Integrated Services
(DPMPTSP) of North Sulawesi Province Indonesia. Archives of Business Research, 9(6). 234-241.
URL: http://dx.doi.org/10.14738/abr.96.10385
Morality of Intentions to Fraud
The results of the research by Puspasari and Suwardi (2012) show that the level of reasoning
low levels of moral reasoning behave differently from people who have a high level of moral
reasoning high when faced with ethical dilemmas. The results of this study support research
that Wilopo 2006), Anastasia and Sparta (2014) stated that the higher the level of individual
moral reasoning, individuals tend not to commit accounting fraud. Based on this description,
the following hypothesis can be formulated:
H1: Morality has a negative and significant effect on intention to commit fraud.
Organizational Commitment to Intention to Fraud
Steers (1985:50) in Adinda and Ikhsan (2015), defines organizational commitment as a sense
of identification (belief in organizational values), involvement (willingness to to try their best
in the interests of the organization) and loyalty (the desire to remain a member of the
organization concerned) declared by an employee to his organization. According to
Najahningrum (2013), organizational commitment shows one's acceptance of the values and
goals of the organization. The attitude taken by employees related to the achievement of
company goals shows how much the employee's commitment to the organization where he
works. Based on description Then the hypothesis can be formulated as follows:
H2: Organizational commitment has a negative effect on the intention to commit
fraud.
Suitability of Compensation against Intention to Fraud
For employees, compensation is a factor that determines the level of welfare, while for
organizations compensation is a component of costs that affect the level of efficiency and
profitability (Thoyibatun, 2009). Research by Thoyibatun (2009) which shows that
compensation has a significant negative effect on the tendency of accounting fraud. The results
of this study are supported by Adiputra's research (2015) which states that Compensation
Suitability has a significant negative effect against fraud. Based on the description, the following
hypothesis can be formulated:
H3: Compensation suitability has a negative effect on the intention to commit fraud.
METHODOLOGY
The population of this study is the State Civil Apparatus who work at the Office of Investment
and One Stop Services (DPMPTSP) of North Sulawesi Province, totaling 32 people. The entire
population is the research sample.
The type of data in this study is quantitative data in the form of values or scores for the answers
given by respondents to the questions contained in the questionnaire. Sources of data used in
this study is primary data which is directly sourced from respondents. The data collection
technique was done by using a questionnaire.
The data analysis method used in this research is multiple linear regression analysis (Multiple
Regression Analysis) with the help of the Statistical Product and Service Solution (SPSS)
program. This analysis is intended to reveal the influence between several independent
variables and the dependent variable.
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RESULT AND DISCUSSION
Simultaneous Effect Test (F test)
In this study, the F test is used to determine whether the coefficients of the independent
variables have a significant effect or not on certain variables. The basis for making the decision
is to look at the significance value. If the value of sig < 0.05 then there is a simultaneous effect
of variable X on variable Y. Conversely, if the value of sig > 0.05 then there is no effect of variable
X simultaneously on variable Y. The results of this test indicate that the variable Morality (X1)
Commitment Organization (X2) and Compensation Suitability (X3) simultaneously affect the
Intention to Fraud (Y) because the value of sig F < 0.05, as shown in Table 1.
Table 1. Simultaneous Effect Test (F test)
Partial Test (t test)
In this study, the t-test is used to test whether the hypothesis proposed in this study is accepted
or not by knowing whether the independent variables are significantly different individual
influences the dependent variable. The method in determining the t table uses the provisions
of a significant level of 0.05 as shown in Table 2.
Table 2. Partial Test (t test)
Based on the results of the analysis in Table 2 , it can be concluded that all hypotheses are
accepted, that there is a significant negative effect of the variables of morality (X1),
organizational commitment (X2) and compensation conformity (X3) on intention to fraud (Y).
The Effect of Morality on Intention to Fraud
The results of this study indicate that morality partially has a negative and significant effect on
the intention to commit fraud. This means that if morality is getting better, the intention to
commit fraud will be low or decrease. Conversely, the higher the intention to commit fraud, the
lower the morality. The results of this study are in accordance with the theory of moral
development of individual morality, presenting that the level of their individual moral
reasoning will affect their ethical behavior. People with low levels of moral reasoning behave
differently from people with high levels of moral reasoning when faced with ethical dilemmas.
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Sutrisno, E. R., Tewal, B., Lengkong, V. P. K., & Sendow, G. M. (2021). The Influence of Morality, Organizational Commitment, and Appropriate
Compensation on the Intention of Fraud Study on Public Services in the Investment Sector at the Office of Investment and One Stop Integrated Services
(DPMPTSP) of North Sulawesi Province Indonesia. Archives of Business Research, 9(6). 234-241.
URL: http://dx.doi.org/10.14738/abr.96.10385
The higher the level of a person's moral reasoning, the individual tends not to commit
accounting fraud, and vice versa if the lower the level of a person's moral reasoning, the
individual is more likely to commit fraud. The results of this study are in line with previous
research conducted by Ariani (2014), Puspasari (2012), and Wilopo (2006) stated that the
morality of the apparatus had a negative and significant effect on the tendency of fraud.
Effect of Organizational Commitment on Intention to Fraud
he results of this study indicate that organizational commitment partially has a negative and
significant effect on the intention to commit fraud. This means that if the organizational
commitment is high, the intention to commit fraud will be low or decreased. On the other hand,
the higher the intention to commit fraud, the lower the organizational commitment.
The relationship between organizational commitment and intention to commit fraud is closely
related. The existence of organizational commitment in a company is believed to be useful in
terms of helping companies detect risks and prevent fraud. Basically, management commitment
and policies of an agency/organization are the main keys in preventing and detecting fraud.
The results of this study are in line with research conducted by Widiutami et al ( 2017),
Virmayani (2017) and Pristiyanti (2012) that employees who have high organizational
commitment to the company, mean employees have understood that when working, the goal is
for the benefit of the organization not for its own sake. So, the higher the organizational
commitment of an employee, the lower the level of tendency for fraud to occur in the company.
Effect of Compensation Suitability on Fraud Intention
The results of this study indicate that the suitability of compensation partially has a negative
and significant effect on the intention to commit fraud. This means that if the suitability of
compensation is as expected, the intention to commit fraud will be low or decrease. On the other
hand, the higher the intention to commit fraud, it indicates that the compensation is not
appropriate.
Providing compensation to employees will help the organization to achieve its goals and obtain,
maintain and keep employees well. On the other hand, without adequate compensation,
dissatisfaction arises. As a result of dissatisfaction, the perceived lack of compensation will
reduce performance, increase complaints, and lead to disciplinary action such as fraud.
Therefore, appropriate compensation will motivate employees not to commit fraud, because by
providing appropriate compensation it will lead to employee satisfaction whose impact can
minimize the occurrence of fraud.
The results of this study are in accordance with previous research conducted by Zulkarnain
(2013) and Thoyibatun (2009) which stated that the suitability of compensation has a negative
and significant effect on the tendency of fraud.
CONCLUSION AND SUGESSTION
Conclusion
Based on the results of the hypothesis testing that has been carried out, it can be concluded
that:
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1. Morality partially has a negative and significant effect on the intention to commit fraud.
This means that if morality is getting better, the intention to commit fraud will be low or
decrease. Conversely, the higher the intention to commit fraud, the lower the morality.
2. Organizational commitment partially has a negative and significant effect on the
intention to commit fraud. This means that if the organizational commitment is high, the
intention to commit fraud will be low or decreased. On the other hand, the higher the
intention to commit fraud, the lower the organizational commitment.
3. The suitability of compensation partially has a negative and significant effect on the
intention to commit fraud. This means that if the compensation suitability is as expected,
the intention to commit fraud will be low or decreased. On the other hand, the higher
the intention to commit fraud, it indicates that the compensation is not appropriate.
Suggestion
1. The management should pay attention to the personal attitude of employees, because
morality is closely related to personal attitude. Personal attitude is a person's personal
attitude that is brought from birth and basically a person's behavior is good but many
external factors can change the individual. This means that a good attitude is the result
of guidance from a good environment.
2. The management should pay more attention to implementing morality, and the
appropriateness of compensation, and it is recommended that management be able to
instill a sense of commitment to the organization to every employee. With these three
factors, it is possible to prevent the risk of fraud occurring in the implementation of
public services.
3. The other researchers or the next researchers are expected to develop and refine further
research in the future. Research development can be directed at other factors that might
influence the tendency of fraud, so as to produce a research regression model that can
predict the tendency of fraud more accurately.
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Sutrisno, E. R., Tewal, B., Lengkong, V. P. K., & Sendow, G. M. (2021). The Influence of Morality, Organizational Commitment, and Appropriate
Compensation on the Intention of Fraud Study on Public Services in the Investment Sector at the Office of Investment and One Stop Integrated Services
(DPMPTSP) of North Sulawesi Province Indonesia. Archives of Business Research, 9(6). 234-241.
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