Internal Control Mechanisms and Fraud Prevention in Microfinance Banks in Akwa Ibom State

Abstract

The study determined the extent to which internal control mechanisms predict prevention of fraud in microfinance banks in Akwa Ibom State. The objective of the study was to determine the extent to which control environment and control activities predict fraud prevention in microfinance banks in Akwa Abom State. The study adopted correlational research design. The population of the study comprised 151 accountants and internal auditors working in microfinance banks in Akwa Ibom State. All the 151 respondents participated in the study using census approach. An instrument instruments titled “Internal Control Mechanisms and Fraud Prevention Questionnaire (ICMFPQ) was used for data collection. The instrument was face validated by three experts. The Cronbach Alpha statistical analysis was used to calculate the reliability of the instruments. A coefficient indices of 0.86 and 0.92 were obtained which showed the instruments were reliable. Out of 151 copies of the questionnaire distributed, 147 were retrieved successfully while 5 copies were not retrieved, representing 97 per cent rate of return. Data was analyzed using simple linear regression analysis for answering both research questions and testing research hypotheses. The findings from data analysis showed that there is a great extent to which control environment predict fraud prevention. While there is a very great extent to which control activities predict prevention of fraud. The study also revealed that revealed that control environment and control activities significantly predict prevention of fraud in microfinance banks in Akwa Ibom State. Based on the findings of the study, it is recommended among others that management of microfinance banks should design and implement strong control environment that is committed to communicate, enforce integrity and ethical values and as well identify, detect and prevent the menace of fraud.