Internal Control Weakness and Corruption: Empirical Evidence from Indonesian Local Governments

Purpose: Corruption still becomes a serious problem in Indonesia the decentralization era. This paper aims at providing comprehensive empirical examination regarding effect of internal control system weaknesses on corruption Indonesian local governments (LGs). Theoretical framework: By drawing concept from fraud theories and agency theory, study explores as determinants LGs. Design/methodology/approach: We use secondary data related regulating bodies during 2010-2018 fiscal period 508 LGs with total 4530 observations, analyzed panel regression. Findings: Our findings suggest that has not experienced significant decrease observation period. The implementation also improved 2010-2018. analysis demonstrates weakness positively affects corruption. Further reveals all element positive corruption, both budget, revenue, expenditure administration, accounting financial reporting, structure weaknesses. Research, Practical & Social implications: Based research findings, our emphasizes needs urgent improvement to support prevention level. policymakers are required take strategic efforts for reform reduce likelihood by irresponsible authorities. Originality/value: fills limitation literature one earliest investigation covers whole regions.