Effect of Internal Control System Effectiveness on Fraud Prevention in Abuja Municipal Area Council (AMAC), FCT, Abuja

Abstract

This study examined the effect of internal control system effectiveness on fraud prevention in Abuja municipal area council (AMAC), FCT, Abuja, the study adopted survey design as it sought to establish the relationships among the study variables. The population for this study consisted of 700 individuals affiliated with AMAC, FCT, Abuja, by applying the Yaro-Yamane formula to the population size of 700, a sample size of 320 was determined. Primary and secondary data were used in the study. The primary data was sourced through the administering of well-structured questionnaire. The multiple linear regression models were used for this study. Based on the results of the analysis, the study shows that that control environments have a positive effect on fraud prevention in AMAC, FCT, ABUJA. Also, the result reveals that audit competences have a positive and insignificant effect on fraud prevention in AMAC, FCT, ABUJA. Furthermore, the finding show that use of technology in control activities have a positive and significant effect on fraud prevention. And finally, the result showed that frequent internal risk assessment has a positively insignificant effect on fraud prevention. Based on the results of the study, it is therefore concluded that forensic accounting services (persuasive skill, audit competences, and technology in auditing) have significant and positive effect on fraud prevention. Based on the findings and conclusion of this study, it is recommended that AMAC, FCT, Abuja management should relentlessly engage the services of forensic accountants as it contributes greatly in fraud prevention. It should place a very high level of dependence on internal audit frequency as it can be employed as an effective tool for financial crimes detection and control. The insignificant in the study is because of poor adjudication of the investigations of forensic accountants. To prevent fraud in the institution, it is recommended that AMAC, FCT, Abuja should employ more persuasive skill. The study also recommends an increased level of dispute resolution mechanisms as it will reduce subsequent level of fraud in AMAC, FCT, Abuja. The study also recommends that management of the institution should enforce individual responsibility, lawsuit, internal controls, internal audit checks, trainings on emerging trends and policy changes, risk department, audit fraud department, internal audit checks, trainings on frauds and sharing of information as legal strategies to prevent frauds.