Internal Auditing and Fraud Prevention a Case of Masaka District Local Government

Abstract

The study looked at the effect of Internal audit on fraud prevention, a case of Masaka District Local Government. Specifically, the study examined the effect of the compliance framework, internal control system and corporate governance processes towards fraud prevention in the District Local Government. The study was based on the Stewardship theory as theory recognizes goal convergence which is key in the provision of Public Services rather than the Agent Self-interest. A steward places greater value on collective rather than individual goals which is also fundamental in the delivery of social services. The study followed a cross sectional research design and provided a snap shot of the frequency of internal audit services in the population at a given point in time and represented the whole population for descriptive analysis. Both Quantitative and qualitative data was used with Documentary review. Quantitatively, Empirical data was collected from the Staff of Masaka District Local Government using a Questionnaire and used the Morgan table for a finite population to ascertain the sample of 68 respondents from the target population of 80traditional civil servants. This sample was selected using simple random sampling and Qualitatively, an interview guide was used to acquire qualitative data. The Questionnaire was tested for Validity and a content validity index of 0.73 was attained which indicated that the tool was valid for data collection. For Reliability, the researcher administered the tool twice on similar respondents of Hoima DLG with in a spell of two weeks ran into SPSSand an average of 0.75 was obtained which meant that the tool was reliable and consistent in application.

Quantitative data was put into SPSS using Karl Pearson’s correlation co- efficient to examine the effect of the internal audit variables on fraudprevention.The key findings of the study indicated that there is a positive strong effect of the 03 (three) internal audit attributes, that is, the compliance framework (.0653), internal control system (.0783) and corporate governance processes (0.669). The model summary suggested that an improvement in internal audit results into 40.3% improvement in fraud prevention other factors account for 59.7% in fraud prevention.From the study, it was recommended that the internal audit function be strengthened with adequate independence, recruit a professional accountant, with the necessary technical skills and experience to head the unit and enhance the annual budgetary allocation given to the unit to further improve on fraud prevention. Compliance with all laws and regulations, plans, procedures, policies and guidelines, implementation of internal controls over transactions and events and safe custody and use of entity assets.Proper appropriation, regular legislation and over sight by the governance organs of Council, are all of paramount importance.Further research is to be done in Internal auditing and accountability for public funds, Internal auditing and attainment of Value for Money and internal auditing and risk mitigation, Internal auditing and financial management practices.

Login to download()