The Effect of Red Flags and Internal Bank Auditor Professional Skepticism on Fraud Detection in Denpasar

Aims: This study was conducted to examine the effect of red flags and auditor's professional skepticism on the ability of internal auditors to detect fraud.

Study Design: Quantitative method with survey method.

Place and Duration of Study: Internal Auditors who work at Rural Credit Banks throughout the City of Denpasar, between October 2022 to December 2022.

Methodology: This study uses a survey method by adopting the previous research variable measurement scale, namely red flags, professional skepticism and fraud detection. The red flags construct is measured by 4 items, professional skepticism is measured by 3 items and the fraud detection construct is measured by 3 items. A five-point Likert scale was used to measure all study constructs, where "5=strongly agree" and "1=strongly disagree". Data collection was carried out through a questionnaire survey using the saturated sampling method, with 42 respondents to the BPR Bank internal auditor research throughout Denpasar City where all respondents were able to participate well. 65% of respondents are male, and 35% are female. More than 55% of respondents have an undergraduate degree or more.

Results: The ability of internal auditors in BPR offices throughout Denpasar City can be improved by optimizing the detection signal (red flag) and expecting the auditor to always be critical through professional skepticism towards the audit evidence presented.

Conclusion: This study has limitations that the sample in this study is still relatively small and only limited to internal auditors who work at Rural Banks throughout the city of Denpasar, so this research suggests for further research by adding and expanding the area, number of samples and using the variable characteristics of internal auditors. Others such as personality, work experience, motivation and knowledge of the auditor as any factors that can influence fraud detection.