Drivers Of Fraud Risk Among State Corporations In Mombasa County In Kenya

Abstract

Fraud is a global problem and affects literally all institutions. Statistics indicate that organization loose at least 5% of their annual collections to fraud. The drives of are generally unknown and it is believed that the same could vary from one institution to another. The aim of this study was to evaluate the drivers of fraud risk among state corporations in Mombasa County in Kenya. In respect to this, key driers of fraud of interest included; financial statement fraud, asset misappropriation and corruption. The study used two major theories; the fraud triangle theory and Clark Study theory. This research study used a descriptive research design that aims at determining and reporting the way things are. The sample size of the study was 64 internal auditors and accountants of state corporations in Mombasa County. Since the accessible population is regarded as small no sampling was done and therefore a census survey was used. This means all the internal auditors of state corporations was used. Structured questionnaires were used for data collection. The questionnaire was self-administered. The researcher will use Statistical Package for Social Sciences (SPSS) for both descriptive analyses, that is, mean, percentages, and correlations. For inferential analysis, a both bivariate linear and multiple linear regressions will be carried out. Model R2, F-Statistics and regression coefficients was generated and interpreted. Inferential statistics will be carried out at 95% degree of confidence. Results will present in Tables and Figures. The study concluded that financial misstatement, asset misappropriation and corruption had a positive and significant effect fraud risk among state corporations in Mombasa County. The study recommends the management of state corporations in Mombasa County to adopt more robust monitoring measures to avoid manipulation of their financial records. There is also need for the management of state corporations to emphasize on proper disclosure of financial statement information. The study also recommends the management of state corporations to ensure that their expenditures are not overstated through the provision of accountability reports. The study further recommends for the adoption of policies to handle financial statements such as Forensic accounting and auditing. The study also recommends the management of state corporations in Mombasa County to put in place punitive measures to curb misappropriation of funds. The study also recommends the management of corporations in the county to audit their personnel databases to get rid of ghost employees. The study further recommends for a strict cash transfer policies to be put in place so as to reduce misappropriation of funds. Finally, the study recommends the management of state corporations in Mombasa County to put in place policies to regulate cases of payoffs and kickbacks. There is also need for the state corporation’s management to adopt severe and punitive penalties measures against perpetrators of payoffs and kickbacks.