The Role of Risk-Based Internal Audit in Improving Fraud Detection Capability: Moderation of Information Technology Systems In The Central Maluku Regency Government

Abstract

This study examines the impact of Risk-Based Internal Auditing (RBIA) on fraud detection (FD) capabilities and investigates the moderating role of Information Technology Systems (ITS) in this relationship. Fraud remains a significant challenge in public sector financial management particularly within local governments, where geographical dispersion and resource constraints can hinder effective oversight. A quantitative survey approach was employed, involving 32 Government Internal Supervisory Apparatus (APIP) auditors from the Central Maluku Regency Inspectorate. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that RBIA influences FD (β = 0.448, p < 0.001), and ITS also impacts FD (β = 0.352, p < 0.001). Furthermore, the interaction between RBIA and ITS significantly affects FD (β = 0.170, p < 0.001), suggesting that ITS strengthens the relationship between RBIA and fraud detection capabilities. These findings imply that integrating risk-based auditing with robust information technology can enhance the ability of local government auditors to identify potential fraud. The study offers practical insights for local governments in archipelagic regions, where geographical fragmentation and operational constraints necessitate audit approaches supported by effective information technology systems. The findings highlight the importance of strengthening both risk-based audit practices and technological capacity to improve fraud oversight and accountability within local government.