Factors influencing the type and occurrence of fraud in deposit taking SACCOs in Kenya

Abstract

Studies have established that a knowledge gap exists with regard to factors influencing fraud occurrence and the types of fraud in SACCOs in Kenya. The aim of the study was to establish the factors influencing the type and fraud occurrence in deposit taking SACCOs in Kenya. Semi-structured questionnaires were used to collect primary data from 176 licensed restricted and unrestricted SACCOs in Kenya. A response rate of 63% was achieved after 111 questionnaires were received. Descriptive statistics, factor analysis, independent T-Test and multiple linear regression were used for analysis. Factor analysis revealed that all factors (pressure, opportunity and rationalization) were significant and thus were retained for further analysis. The regression results indicated that opportunity and rationalization had a statistically significant influence on fraud occurrence, while pressure had no statistically significant influence on fraud occurrence. There was general consensus on perceptions of respondents of restricted and unrestricted licensed SACCOs in most of fraud influencing factors. These study also highlighted significant difference in perception among restricted and unrestricted SACCOs on specific factors related to pressure, opportunity and rationalization that were linked to fraud occurrence. It was also established that employee fraud, asset misappropriation and corruption were perceived to have a high prevalence rate, with a general consensus among all participants. The correlation analysis results revealed that all the fraud-related factors had a positive relationship with fraud occurrence though opportunity and rationalization exhibited a stronger positive significant relationship when compared to pressure. The major limitation of the study was the dependence on the fraud triangle theory in determining fraud influencing factors and the exclusive use of questionnaires to collect data. This study was also limited in geographical coverage, time and industry. It is recommended that future studies could employ secondary data and use alternative theories to determine fraud influencing factors such as the cultural transmission theory and the anomie theory.