The Study of Implementing Fraud Risk Assessment of Credit Decision in Determining Auditors’ Response : A Study at PT. BPR – Bandung

Abstract

This research aims to find out the effect of fraud risk assessment in determining Auditors response in the terms of the nature, extent, and timing, for further audit procedures. Study is conducted at People‟s Credit Bank (Bank BPR) which is a bank that conducts the business conventionally. Bank is a subject to fraud risk, especially fraud risk from lending process. Fraud risk can cause material misstatement in bank‟s financial statements and misappropriation of assets. therefore, bank management will hire external auditor to audit the financial statements. Analytical descriptive method is used to solve and answer the problems. Based on the study conducted, the identified significant fraud risks are kickbacks on illegal loans and kickbacks related to external fraud, which are asset-based and floor plan loan fraud. Company‟s relevant internal control can mitigate some of the fraud risk. For auditor‟s responds, auditor should expand substantive test for reconciliation and collateral appraisal, conduct audit at the end of period, and increase the number of the sample used. In the future, company should use pre-numbered credit document. Company should segregate duty between credit analyst and internal inspector unit, perform job rotation regularly, synchronized organization structure and job description, and use appraisal service for collateral appraisal.