Determinants of fraud incidents and coping mechanisms for village fund system in Indonesia

This study examines the factors contributing to fraud incidents and the coping mechanisms employed to manage village funds within Indonesia’s Village Fund System (Siskeudes). It was raised due to the increasing number of cases of village fund misuse reported by Indonesia Corruption Watch, which reveal persistent issues of integrity and accountability in local financial governance. Drawing on the Fraud Diamond Theory, which comprises four core dimensions (pressure, opportunity, rationalization, and capability), this study integrated spiritual work ethic (SWE) as a moderating variable. Further, it examined coping mechanisms as behavioral responses to fraud risk in the digitized public finance environment. A quantitative research design was adopted, utilizing Structural Equation Modeling - Partial Least Squares (SEM-PLS) through SmartPLS version 3. Data were collected from village officials across 29 districts in Central Java Province, Indonesia, using a purposive sampling approach that involved directly engaging Siskeudes operators and fund managers as respondents.