Fraud Mitigation at Muhammadiyah Schools with Moral Sensitivity as a Moderating Variable

Abstract

This study aims to analyze the influence of ethical leadership, whistleblowing systems, and internal controls on fraud mitigation in Muhammadiyah schools, with moral sensitivity as moderating variable. The research approach used was quantitative, involving the distribution of questionnaires to 54 respondents consisting of school administrators and financial staff within the Muhammadiyah environment. Data analyzed using PLS-SEM (Partial Least Squares Structural Equation Modeling. The results indicate that only internal controls have a significant effect on fraud mitigation. Conversely, ethical leadership and whistleblowing systems do not have a significant effect. Furthermore, moral sensitivity was found to be unable to moderate the relationship between independent variables and fraud mitigation. These findings indicate that within a homogeneous, religion-based organizational environment, strengthening formal governance systems and rigid internal audits is far more effective in reducing the risk of fraud than merely relying on individual moral attributes or existing reporting mechanisms.