THE ROLE OF RECRUITMENT AND SELECTION EFFECT ON PREVENTING FRAUD IN INDUSTRIAL SECTOR

Abstract

This study aims to analyze the role of recruitment and selection in preventing fraud in the industrial sector, specifically examining how these processes contribute to effectiveness as well as early prevention of the possibility of committing fraud. This study uses a quantitative approach with a survey design involving 200 employees from various industrial companies in Indonesia. Data was collected through a questionnaire that had been tested for validity and reliability. Multiple regression analysis was used to test the research hypothesis. This study contributes to the auditing literature by providing a self-control context for committing fraud. These findings provide practical implications for companies to prioritize the quality of the recruitment and selection process, invest in creating a clean and honest company climate and avoid fraudulent acts. Policy makers in the industrial sector are encouraged to formulate guidelines that support systematic and goal-based recruitment practices to improve overall employee performance, provide comfort and honesty and ethics to employees, and organizational competitiveness. Recruitment has a positive and significant influence on fraud prevention (β = 0.456, p < 0.001), and selection also has a positive and significant influence on fraud prevention (β = 0.523, p < 0.001). These two variables together explain 67.8% of the variation in fraud prevention (R² = 0.678), indicating that effective recruitment and selection are important determinants of fraud prevention in the industrial sector. Future research should consider a broader range of industry sectors and explore moderator or mediating variables – such as organizational culture or training practices – that may influence the relationship between recruitment, selection, and fraud prevention.