Adaptive Internal Controls and Digital Transformation in Preventing Public Sector Fraud

Abstract

The development of the digital era has transformed the paradigm of public financial management through process automation, transaction digitalization, and cross-system data integration. This transformation creates significant opportunities for efficiency but simultaneously introduces new risks in the form of digital fraud and threats to the integrity of state finances. This study aims to analyze the role of adaptive internal control and digital internal audit in preventing fraud within the Indonesian public sector. By reviewing empirical literature from the last five years, the findings indicate that the implementation of digital audit tools, e-governance, and real-time internal control systems enhances accountability, early detection, and public financial transparency. Moreover, the digital competence of auditors and technology governance emerges as key determinants of the effectiveness of adaptive auditing in addressing cyber risks and digital fraud. Strengthening these elements contributes to building a resilient public financial oversight framework capable of responding to increasingly complex digital threats. The results of this study are expected to reinforce technology-based supervision policies and support the development of internal control systems that remain robust in the face of rapid digital advancement across government financial processes.