The Effect of Competence and Integrity on the Ability to Detect Fraud with Professional Skepticism as an Intervening Variable

Abstract

Auditors play a vital role in ensuring that financial statements comply with established standards and are free from material misstatements, whether caused by error or fraud. In the era of globalization, increasing complexity in business operations has led to more sophisticated fraudulent schemes, making fraud detection a growing challenge. To effectively detect and prevent fraud, auditors are expected to demonstrate high levels of competence and integrity. This study investigates the influence of auditor competence and integrity on the ability to detect fraud, with professional skepticism acting as a mediating variable. A quantitative approach was employed, involving 58 auditors from public accounting firms in Jakarta. Data were analyzed using Partial Least Squares Structural Equation Modeling (SEM-PLS). The results reveal that while integrity has a positive effect on fraud detection ability, competence does not show a significant direct effect. Both competence and integrity have a positive influence on professional skepticism. However, professional skepticism does not significantly mediate the relationship between either competence or integrity and the detection of fraud. These findings suggest that although personal auditor attributes influence professional skepticism, it may not necessarily translate into enhanced fraud detection performance.