INTERNAL CONTROLS, STAFF RED FLAGS AND COMPUTERIZED FINANCIAL FRAUD AMONG COMMERCIAL BANKS IN KENYA

Abstract

The main objective of this study was to evaluate key predictors of computerized fraud among commercial banks in Kenya. The specific objectives of the study were; to examine role of internal controls and employee’s red flags in predicting computerized computer frauds among commercial banks in Kenya. The study was anchored on mindset and fraud triangle theory. The study employed a descriptive research design and targeted a total of 90 staffs of commercial banks in Kenya; risk and compliance managers, bank operation managers, head of credit and branch managers. Primary data was collected using a self administered, semi-structured questionnaire. SPSS software version 21 was used in analysing the data. Both descriptive analysis and inferential analysis was done. Results of the study revealed that the influence of internal controls, employee’s red flags as predictors for computerized financial fraud in commercial banks in Kenya were both positive and statistically significant. The study recommends that management of commercial banks in Kenya should ensure that there is an elaborate and effective IT controls. The study further recommends the management of Kenya commercial banks to conduct frequent internal auditing to limit the possibilities of a fraud. Moreover, the study recommends that management of commercial banks in Kenya should take more interest in internal controls around computerized systems and monitor staff red flags associated with computerized frauds. The regulator should also continuously monitor to ensure there is a strong control environment within commercial banks.