EFFECT OF INTERNAL CONTROL AND COMPETENCE OF BPD ON FRAUD PREVENTION IN BUMDES

Abstract

Village-Owned Enterprises (BUMDes) are village businesses formed and established by the village government. The main purpose of establishing BUMDes is an effort to strengthen the village economy through meeting the needs and optimizing the potential of the village. BUMDes aims to improve services to the community while empowering the village through productive efforts so that the independence and capacity of the village in strengthening the economy has increased. In fact, often the establishment of BUMDes seems only a formality to answer the mandatory from the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration about the establishment of BUMDes.Also, the Government through the Minister of Home Affairs Regulation No. 110 of 2016 has provided BPD (Village Consultative Agency) with the aim of making BPD as a supervisory function on the implementation and performance of village government, including BUMDes performance. But still, BUMDes are followed by problems that must be overcome both from the operational and managerial sides. The amount ofBUMDes in Indonesia are increasing every year but not accompanied by the significance of increasing the Realization of Village Original Income (PADes). This study uses quantitative research that aims to test the influence of Internal Control and Supervisory Competence on fraud prevention in the management of BUMDes. The data collection method in this study is a survey method with questionnaire instruments which are then analyzed using statistical tests. From the result of this study, internal control and competence of BPD has a positive and significant effect on fraud prevention with a determinant coefficient of 68.9%. While the remaining 31.1% are explained by other factors outside this research model.