An examination of the effectiveness of strategies to counter workplace fraud in organisations in Kenya: an internal auditors’ perspective

Abstract

The research goal was to establish through descriptive research, the strategies available to counter workplace fraud in various industries in Kenya, from the perspective of internal auditors. The study examined the extent to which companies that had been affected by instances of fraud had implemented strategies to counter the problem and to describe how they did it. It sought to assess the extent of fraud encountered by internal auditors in Kenya, evaluate the challenges faced by internal auditors in detecting fraud in organisations operating in Kenya and evaluate the strategies put in place by organisations operating in Kenya to deter fraud, from the perspective of internal auditors. The study aimed at assisting organisations find ways of combating fraud. The study population comprised members of the Institute of Internal Auditors (Kenya). A total of 57 online questionnaires were received from the respondents from a sample of 148. Three distinct fraud schemes were identified: schemes that involve cash transactions, corruption and misappropriations. The study revealed that larger organizations with over 1,000 employees were more susceptible to fraud as were organizations in the banking and financial services, insurance and government/public administration sectors. The median monetary loss to fraud was KES 5 Million over the last five years. Further, the study showed that CEOs and senior managers were responsible for colossal monetary losses of between (median) KES 2.4 Billion and KES 20 Million respectively compared to KES 250,000 and KES 12.5 Million by other staff. Further segmentation was done using demographic profiles such as; age, gender, education, work experience and position of the perpetrator. No significant relationship was noted between the monetary value of fraud and the characteristics of fraud perpetrators. The most effective fraud deterrent mechanisms were effective internal controls. The study recommends that due to the challenges of limited time and staff resources faced by internal auditors, their focus should be on monitoring the effectiveness of their organisations’ internal controls to address the fraud problem.