Perceived effect of internal control systems on fraud detection and prevention in the public sector in Kenya; a case study of civil registration department

Abstract

An effective internal control system should be able to provide managers with the means to increase accountability for their plans and to obtain reasonable assurance that the programs they direct meet established goals and objectives. Fraud related practices have increasingly been reported in Kenya public sector, despite of the government instituting internal controls systems. The overall study objective was to establish the effectiveness of internal controls on fraud detection and prevention in the public sector in Kenya. It addresses four specific objectives to establish the effect of the control environment and activities, risk assessment, information and communication and monitoring and evaluation on fraud detection and prevention at the Civil Registration department Kenya. The study was guided by the fraud triangle theory and self-control theory. Cross-sectional survey research design was used with a sample of 260 staff from various units in the Civil registration department. These were Headquarters, Field services, Central registry, and Nairobi registry. The results show that Control activities and environment (ß1=0.158, P=0.002), risk assessment (ß2=0.514, P<0.001), information and communication (ß3=0.128, P=0.025), and monitoring and evaluation activities (ß4=0.117, P=0.028) significantly and positively influence fraud detection and prevention. In summary, the study concludes that there is a significant positive relationship between internal control systems and fraud detection and prevention in the department of civil registration in Kenya. The five identified components of effective internal controls: control environment and activities, risk assessment; information and communications and monitoring, should be applied in a collaborative linkage to form an integrated system that reacts dynamically to changing conditions. The internal control system should be merged with the operations of the civil registration department to enhance detection and prevention of fraud. The study therefore recommends that effective and efficient internal control policies and procedures should be put in place to detect and prevent fraud within government departments and other institutions.