STRONG LEADERSHIP AND POLITICAL WILL IN FRAUD AVOIDANCE

DOI: 10.21532/apfj.001.17.02.01.08 ABSTRACT Post reformation, Indonesia emerging as a democratic state. On one side, democracy bringing new chapter in political life, but on the other euphoria of democracy excessively rising. Openness brings negative impacts such as fraud in the financial sector, company that carried out by individual or organized group of people. Government of Indonesia established Indonesia’s Financial Services Authority (OJK). Fraud does not only happen in Indonesia. In many parts of the world fraud occurs and involves politics. It can be seen that the actors who commit fraud come from different back ground and social status. Todays, fraud form of action can be diversed and sophisticated as well as development of modern technology, new regulations, and systems. This research uses a qualitative research design. Analyses were performed by literature review. Thus fraud is fraudulent acts, performed in such a way that benefits yourself / group to harm others (individuals, companies or institutions). Encouragement that helped prompt fraud are as follows: pressure (the urge to commit fraud), opportunities (opportunities that enable fraud), and rationalization (perpetrator to justify his actions). Overall encouragement of fraud is known as the fraud triangle.Based on fraud triangle, the simplest way to avoid fraud by high selfconsciuosness, strong political will and law enforecement, and leadership and decentralization


Introduction
Post reformation, Indonesia emerging as a democratic state.On one side, democracy bringing new chapter in political life, but on the other euphoria of democracy excessively rising.Openness brings negative impacts such as fraud in the financial sector, company that carried out by individual or organized group of people.
Fraud does not only happen in Indonesia.In many parts of the world fraud occurs and involves politics.In some cases, fraud actors supported government in power.Fraud also occurs in developed countries, as outlined in Table 2 below: It can be seen that the actors who commit fraud come from different back ground and social status.While not intending to generalize but can be seen that the perpetrator could be anyone in the field of employment.But certainly the culprit is the human individual or roup of people to commit fraud against other people or organizations that cause lost.Todays, fraud form of action can be diversed and sophisticated as well as development of modern technology, new regulations, and systems.
There are two kinds of mistake in financial sector which is errors and fraud.The difference between error and fraud are separated by a thin membrane which is known as intentional factor.In many cases, it is difficult to identify fraud because of the tendency of individuals or organizations to hide it.Thus fraud is fraudulent acts, performed in such a way that benefits yourself / group to harm others (individuals, companies or institutions).
Encouragement that helped prompt fraud are as follows: pressure (the urge to commit fraud), opportunities (opportunities that enable fraud), and rationalization (perpetrator to justify his actions).Overall encouragement of fraud is known as the fraud triangle.The phenomenons of fraud are attracting me in researching on fraud and efforts to avoid it.In this article the authors premise is weaker system and lack of political will developing bigger chance of fraud opportunities.

Conceptual Framework.
What is Fraud?There are so many definitions or coercion truth, and include all unpredictable ways, full of violent tactics, hidden and any dishonest ways that cause others to be fooled.
In short it can be said that fraud is cheating of money or properties.The Institute of Internal Auditor (IIA) determines fraud as "An array of irregularities and illegal acts characterized by intentional deception".
Webster's New World Dictionary defines fraud as a form of deception for personal  Throughout our waking life, we are conscious of a variety of things.We are often conscious of other things.Sometimes we are also conscious of ourselves, our features, and the events that take place within us.Thus, we may become conscious, in a certain situation, of the fact that we are nervous or uncomfortable.
Thus William James (1961:42)  Therefor, understanding the basic value of social culture and ethics can be applicable to avoid fraud in the daily life.

Strong political will and law enforcement.
In discussing governance reform efforts that have not worked, the phrase 'political will' comes up a lot, usually in the formulation 'lack of political will'.But it appears that the phrase is so elastic it is becoming meaningless.'Political will' tends to mean this: we got the government to agree to a program of reform, either to accept a grant or take a loan designed to pay for the program.Lori Post et al (2008:114) in Odugbemi and Jacobson (2008) ., 'political will can be thought of as support from political leaders that results in policy change' as well as Matthew Andrews (2004, 2007:105) and Odugbemi and Jacobson (2008) They are sensitive to their own conscience as a higher principle, and use this guide as a check against every action they may be about to take, even where it appears to be permissible in law and acceptable generally.The dangers of decentralization have been listed by many, and include a lack of capacity causing macro instability (Prud'homme,1994;Tanzi,1995;1995b).Others have tracked the diversion of funds in decentralized settings (Reinikka and Svensson, 2004) while still others have warned of the dangers of capture by local elites (Bardhan and Mookherjee, 2000).
Companies and organizations have internal auditors or supervisors.Both sectors are crucial.If two sectors are joined against fraud it will develop dicipline among employees.Thus, it needs to be done by decentralized control system inwhich supported SOP to check any evidents related to fraud (Birch,2008).

Decentralized is different from deconcentration.
Decentralization is the granting authority without ignoring the authority to control over it.

Fraud Avoidances
In fraud cases, the most vulnerable profession is the profession of accountants and auditors.Enron Corporation financial case raises new spotlight for the accounting profession.One of the supreme leader company Enron had committed suicide after the case opened to public.Survey by Ernst & Young states found that 15% of CFOs are willing to "spend" (bribes) to win the business competition or perpetuate the hegemony of the business.
Theoretically, the fraud is done when it meets three criteria: intention, deception, beneficial for private in contrast to stole from others.As I said above, both individually or group, the perpetrator is a man.With so many modes, types, and forms of fraud then the primary unit of analysis is a man, that have associated with self-conciousness, strong political will and law enforcement, and leadership and decentralization to avoid fraud.
Gillian Lees in Fraud Risk Management, A guide to good practice, found more than 110 business enterprises fraud models that start from a trivial thing to the big thing (crucial).
Although the pretext has no strict and tiered system with clear procedures could not be ascertained the truth of financial accountability in line with the implementation.The Indonesian Government has established the Financial Services Authority (FSA) but in reality only focus government bureaucracy at the central and unfair.Structural problems that occur outside of government is very difficult to execute.Even the FSA still requires a lot of personnel to be able to bear the burden and responsibility for so many organizations that are vulnerable to fraud.Thus to have a cadre of integrity begins with a good recruit.
When the recruitment process is going well and the government did not make the FSA as an instrument of power, the fraud will be eliminated.All of those efforts can be expalined in the figure 4   It should be noted, there is no internal control system that is immune to fraud.
Effectiveness will depend on the competence of supervisors or auditors who must ensure the implementation of internal controls.Based on fraud triangle, then the pressure, opportunity, and rationalization that come together will increase the chances of fraud.
But, if any one of the triangular elements is

Figure 1 .
Figure 1.Fraud Triangle This research uses a qualitative research design.Analyses were performed by literature review.Primary data were obtained through analysis of views and arguments of national leaders and anti-corruption agencies, the financial services authority, and law enforcement.Secondary data obtained through books, articles, and both printed and online media.
of fraud.According to Black's Law Dictionary fraud is "covering all kinds of conceivable human, and pursued by a person, for the benefit of another person with the wrong suggestion Volume 2, No.1 st Edition (January-June 2017) Safril Hidayat : Strong leadership and political will in fraud avoidance ..... Page 81-92 purpose.Internationa Standards of Auditing section 240 -The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statement paragraph 6 defines fraud as "…intentional acts by members of the company management, the parties involved in governance, companies, employees, or third parties who commit deception or fraud to gain an unfair or illegal".CGMA defines "Fraud essentially involves using deception to make a personal gain dishonestly for oneself and/or create a loss for another."Thus the motivational factor can be the same, enriching himself / group and the same modus operandi, is to perform in ways that are illegal.Based on fraud triangle, the simplest way to avoid fraud by high self-consciuosness, strong political will and law enforecement, and leadership and decentralization as mentioned by figure 2 below:

Figure
Figure 2. Conceptual framework remarked once that "whatever I may be thinking of, I am always at the same time more or less aware of myself, of my personal existence".Selfconsciousness has thus mostly focused on the identification and articulation of epistemic and semantic peculiarities, that is, peculiarities as regards how we know, and more generally how we represent, ourselves and our internal lives.Page 81-92 Perhaps the best known philosophical threat to the very possibility of self-consciousness hails from Hume's (1739) remarks in the Treatise of Human Nature (I, IV, VI): "For my part, when I enter most intimately into what I call myself, I always stumble on some particular perception or other… I never can catch myself without a perception, and never can observe anything but the perception."According to those theories, perception can represent what we know.
, says the real solution is 'political engagement that focuses on expanding space for change...'.Strong political will is formed through a strong personal awareness.Strong political will would result in effective regulation in enforcing the law.Effective regulatory is consisted of indicators to determine fraud.These indicators are wrapped in the form of regulatory law.Socialization of law ang regulations will generate curiousity and awareness to the organization or individual.Law enforcement is the activity of making certain that the laws of an area are obeyed.Law enforcement not only by governments, but also involving the company or organization.The government makes regulations that restrict the behavior of fraud, and the legal apparatus consistency to enforce it.3.3.Strong Leadership and decentralization.Most leadership is by example, and the effect of example can be very enduring.Great leadership influence the lives of all those you influenced, mentored, encouraged and taught.In this case leading by example that does not tolerate any kind, forms, and modus of fraud.All strong leaders know their own strengths and weaknesses.They know their limitations, and what complementary skills they need in their teams to work most effectively.They are humble, teachable and quick to defer.What is more, they listen to the voice within, to their own thoughts and values about what really matters.
On the other hand, "decentralization" generally means the devolution of decisionmaking powers.A related concept is Volume 2, No.1 st Edition (January-June 2017) Safril Hidayat : Strong leadership and political will in fraud avoidance ..... Page 81-92 "deconcentration," in which operations are decentralized, but decision-making powers are not devolved.Decentralization is in which lower level autonomy to set their own priorities and decide how best deliver public services.In addition, decentralization does not necessarily denote an erosion of central control nor of powers over issues and processes with national dimensions.But decentralization is not an automatic remedy.

Figure 4 .
Figure 4. Simple process of fraud avoidance In the recruitment, the personal character of the employee must be considered such as: can explain the property owned, do not have a lifestyle of luxury, employees often feel disappointed / unsatisfied with the decision of the management, selfish, employees often missing, fraud will not occur.Build obstacle to collusion because fraud occurs accompanied by collusion.Collusion is usually not built in a short time so the sollution is to rotate personnel or job transfer periodically.The companies or organization provide clear policy and information to customers periodically about avoidance of any bribes or gifts.Suspected perpetrators can be determined by changing in life style and private facilities.Therefor, companies or organizations should make a hotline.When a personnel felt that co-workers or others have a very easy way to report the occurrence of fraud, it will reduce the intention of doing fraud itself.Usualy an investigation of fraud carried out after the victims found (reactive).Proactive means to build awareness of the personnel that what they are doing at any moment be reviewed.This will provide the personality fear to be caught if doing fraud.Fear of punishment will obviously reduce dishonest behavior.Punishment firm and consistent will make people think a thousand times before ensuring ready to commit fraud.If it were just fired, sometimes not strong enough to prevent fraud.Thus, people can tell the family or those closest to the dishonest behavior of the personnel who do fraud as social punishment.The company that wants to protect its assets should have clear policy about the nature and magnitude of sanctions against perpetrators of fraud, such as: anyone involved fraud can be dismissed or legal sanctions.This research uses a qualitative research design.Analyses were performed by literature review.