ROLE OF GOVERNMENT INTERNAL SUPERVISORY APPARATUS AND RISK MANAGEMENT IN REDUCING FRAUD IN INDONESIAN LOCAL GOVERNMENTS

Corruption remains a persistent challenge in Indonesia’s local governments, where weak oversight and
fragmented controls continue to create opportunities for fraud. This study examines how the capability of the
Government Internal Supervisory Apparatus (APIP) and risk management maturity in reducing fraud in
Indonesia, using the Corruption Control Effectiveness Index (CCEI) as a proxy. This study employs a
quantitative approach, utilizing secondary data from 1,018 observations spanning fiscal years 2021–2022.
The analysis employs descriptive statistics, correlation testing, and a fixed effects regression model. The
results show that both APIP capability and the risk management index have a significant positive effect on
the CCEI. Larger and older local governments tend to perform better, reflecting institutional experience and
established control systems. These findings underscore the importance of strengthening APIP capacity and
institutionalizing risk management to effectively curb fraudulent practices in Indonesia’s public governance.
The study contributes to the literature by integrating APIP capability and risk management effectiveness
within a single analytical framework, using the CCEI as a fraud indicator—an approach still relatively rare in
research on Indonesia’s local governance.