Fraud remains a persistent challenge in the shipping industry due to complex operations, geographically dispersed activities, and high-value transactions. While internal audit, whistleblowing systems, and ethical culture are widely recognised as key fraud prevention mechanisms, empirical evidence examining their combined effectiveness within the shipping industry, particularly in emerging economies, remains limited. This study investigates the influence of internal audit quality, whistleblowing systems, and organizational ethical culture on fraud prevention in Indonesian shipping companies. Using a survey-based research design, data were collected from 306 employees across multiple shipping companies and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The results indicate that internal audit quality has a significant but relatively weak effect on fraud prevention, whereas whistleblowing systems and ethical culture exert significant and moderate effects. Notably, ethical culture emerges as the strongest predictor of fraud prevention, suggesting that informal control mechanisms may play a more decisive role than formal controls in complex operational environments. This study contributes to the fraud and governance literature by integrating internal audit, whistleblowing systems, and ethical culture into a single empirical model within the under-researched context of the shipping industry. The findings offer practical insights for shipping companies by highlighting the need to align formal assurance mechanisms with a strong ethical culture to enhance fraud prevention effectiveness.
Mughis et al. (Thu,) studied this question.
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