Internal Audit Organisational Status, Competencies, Activities and Fraud Management in the Financial Services Sector

The purpose of this paper is to study the relationship between internal audit organisational status, competencies, activities and fraud management. As a corollary, this paper examines the contribution made by the internal audit organisational status, the internal audit competence and the internal audit activities on fraud management in financial services firms. This study is cross-sectional and correlational, and it uses firm-level data that were collected by means of a questionnaire survey from a sample of 54 financial services firms in Kampala – Uganda. Results suggest that the internal audit organisational status and the internal audit competence are significant predictors of fraud management. Contrary to previous thinking, internal audit activities do not significantly predict fraud management. Therefore, once internal auditors have appropriate status and are competent in an organisation, they are likely to perform activities that enhance fraud management. This study focuses on financial services firms in Uganda, and it is possible that these results are only applicable to the financial services sector. More research is therefore needed to further understand the contribution of the internal audit constructs on fraud management in other sectors such as the public sector. The results are important for internal audit policy development, for example, in terms of prescribing the competences and reporting lines for the internal auditors to enhance fraud management in the financial services sector. As far as the authors are aware, no research has hitherto been undertaken that investigates the individual contribution of internal audit organisation status, competence and its activities as internal audit constructs on fraud management.
Financial services, Internal audit, Fraud management
Kabuye, F., Nkundabanyanga, S. K., Opiso, J., & Nakabuye, Z. (2017). Internal audit organisational status, competencies, activities and fraud management in the financial services sector. Managerial Auditing Journal.