Bridging Ethics, Digital Transformation, and Control Systems: The Role of Ethical Climate in SME Fraud Prevention

Authors

  • Yasya Rahmanda Universitas Muhammadiyah Yogyakarta, Bantul, Indonesia
  • Ietje Nazaruddin Universitas Muhammadiyah Yogyakarta, Bantul, Indonesia

Abstract

This study aims to examine the mediating role of ethical climate in the relationship between ethical orientation, digital transformation, management control systems (MCS), and fraud prevention in small and medium-sized enterprises (SMEs). This study employs an explanatory quantitative design with primary data collected from SME owners and managers in the Special Region of Yogyakarta through purposive sampling. Data analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM) with the assistance of SmartPLS 4. The results indicate that idealism, digital transformation, and MCS significantly influence the enhancement of the ethical climate, which in turn strengthens fraud prevention. An ethical climate was found to fully mediate the effect of digital transformation and partially mediate the effects of idealism and SPM, while no mediating effect was found for relativism. These findings indicate that the effectiveness of fraud prevention in SMEs depends not only on formal control systems and the adoption of digital technology but also on the internalization of ethical values within the organizational climate. This study contributes by affirming the central role of the ethical climate as a mediating mechanism that links individual ethics and organizational governance in mitigating fraud risk.

Author Biography

Ietje Nazaruddin, Universitas Muhammadiyah Yogyakarta, Bantul, Indonesia

Lecturer and researcher at the Department of Accounting, Universitas Muhammadiyah Yogyakarta, Indonesia.

Published

2025-09-30

How to Cite

Rahmanda, Y., & Nazaruddin, I. (2025). Bridging Ethics, Digital Transformation, and Control Systems: The Role of Ethical Climate in SME Fraud Prevention. Jurnal REKSA: Rekayasa Keuangan, Syariah Dan Audit, 13(2). Retrieved from http://journal2.uad.ac.id/index.php/reksa/article/view/16501

Issue

Vol. 13 No. 2 (2026)

Section

Articles

License

Copyright (c) 2026 Yasya Rahmanda, Ietje Nazaruddin

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