Unlocking budget fraud prevention: Synergistic role of budget planning, participation, and internal control through effective budgetary policy

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Abstract
Type of the article: Research Article AbstractThis study examines the impact of budget planning, participation, and internal control on preventing fraud in the budget and testing the mediating role of effective budgetary policy. A quantitative research approach was carried out in which a structured survey was administered to 178 heads of work units in local government agencies of 14 districts in East Java Province, Indonesia. These respondents were purposively sampled, considering their active role in the budget preparation, to enhance data relevance and reliability. The data collection period was from February to March 2025. The study adheres to rigorous ethical standards to protect human participants and the integrity of the research process. The study found that budget participation is the most significant variable for fraud prevention (β = .747, p < 0.001), followed by budget planning (β = 0.147, p = .017). Internal control and budget policy had no direct effect on fraud prevention. Notably, budget policy had a significant mediation effect between each predictor and fraud prevention, particularly for budget planning (indirect effect β = .352, p < 0.001). The results indicate that fraud prevention can best occur using participatory practices and planning that are contained within a strong, enforceable budgetary policy. It is suggested that there should be institutionalized budget systems with integrated governance systems to facilitate financial integrity.

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