Coso-Based Control With The Belief in Karmaphala In The Business Sustainability of People's Credit Institutions (LPD)

Abstract

Objectives: Village Credit Institutions (LPD) are unique financial institutions that exist only in Bali. In 2021, two LPDs in Denpasar, the provincial capital of Bali, experienced significant problems due to ineffective internal controls, resulting in the embezzlement of funds. This research focuses on internal control based on the Committee of Sponsoring Organization of The Treadway Commission (COSO) framework within LPDs, incorporating aspects of Balinese beliefs, specifically Karmaphala, to evaluate their influence on the sustainability of LPD businesses. Methods: The research methodology follows several stages: identifying the issue, collecting relevant theories and hypotheses, observing the population and sample, collecting data, conducting tests, analyzing the data, and reporting the results. The study aims to test the interaction between COSO-based internal control and the business continuity of LPDs, particularly through the lens of karmaphala beliefs held by LPD supervisors. Results: The testing phase indicates that the interaction of COSO-based internal control positively and significantly influences LPD business continuity. The belief in karmaphala among LPD supervisors strengthens the relationship between COSO-based internal control and the sustainability of LPD businesses, suggesting that supervisors who adhere to the law of karma contribute effectively to maintaining robust internal controls and ensuring business sustainability. Conclusion: The study concludes that effective internal control based on the COSO framework, combined with the Balinese belief in karmaphala, significantly enhances the sustainability of LPD businesses. Supervisors who incorporate these beliefs into their oversight practices provide a stronger, more positive impact on the continuity and stability of LPD operations.