Evaluation of the Internal Control System Towards Fraud Prevention in the Procurement of Goods and Services: A Case Study of Building Management Apartment a and Mixed-Use Building B

Abstract

Problems in the governance of goods and services procurement in commercial properties and vertical residential areas are vulnerable to the risk of fraud if not supported by an adequate internal control system. This study aims to evaluate the effectiveness of the internal control system in preventing potential fraud in the procurement of goods and services and formulate control strategies in the Building Management of Apartment A and Mixed-Use Building B. Using a descriptive qualitative approach, data collection was conducted through in-depth interviews with key informants, observation, and analysis of historical transaction documents. The evaluation was analyzed based on the COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework and the Fraud Triangle theoretical approach. The results of the study indicate that although administrative compliance with transaction documents (such as three-way matching) has been implemented, the effectiveness of internal control is still hampered by the absence of a formal Risk Register, the absence of a Whistleblowing System (WBS), and the long lead time for approval from Purchase Request (PR) to Purchase Order (PO). The slow bureaucratic duration creates an opportunity gap in the form of procedural bypass practices in emergency procurement. The implications of this study require management to digitize procurement through integrated e-procurement, simplify the bureaucratic approval flow, and strengthen the independent oversight function to mitigate the risk of irregularities preventively.