Jul 2026· JALINGO JOURNAL OF SOCIAL AND MANAGEMENT SCIENCES· Vol 7, pp. 226-239· 0 citations· 21 references
Abstract
Fraud remains one of the most significant threats to organizational performance, accountability, and long-term sustainability across both public and private sectors. Despite considerable investments in internal control systems, organizations continue to experience financial losses resulting from fraudulent activities such as financial statement manipulation, procurement fraud, cybercrime, and asset misappropriation. In response to these challenges, internal auditing has evolved beyond its traditional compliance role to become a strategic governance mechanism for risk management and fraud prevention. This paper reviews existing theoretical and empirical literature on the relationship between internal audit quality and fraud detection effectiveness in the manufacturing, banking, and oil and gas sectors. Drawing on Agency Theory, Fraud Triangle Theory, and Institutional Theory, the study examines how factors such as auditor independence, professional competence, technological capability, and regulatory compliance influence organizations' ability to detect and prevent fraud. The review further highlights how industry-specific characteristics shape the effectiveness of internal audit functions and fraud management practices. The findings indicate that organizations with strong internal audit systems are generally more successful in identifying control weaknesses, detecting fraudulent activities, and enhancing overall governance performance. While the banking sector demonstrates relatively higher fraud detection effectiveness due to advanced technology and strict regulatory oversight, the oil and gas sector faces persistent governance challenges despite significant audit investments. Manufacturing firms, on the other hand, continue to grapple with operational vulnerabilities associated with inventory management and procurement processes. By providing a comparative synthesis across multiple sectors, this study extends existing literature that has largely focused on single-industry investigations. The paper concludes that strengthening auditor independence, embracing technological innovation, and investing in continuous professional development are essential for improving fraud detection effectiveness and promoting organizational accountability.
Financial statement fraud remains a persistent threat to the integrity of global capital markets despite extensive auditing standards and regulatory reforms. This study systematically reviews literature on external auditors' responsibilities in fraud detection and evaluates why significant audit failures continue to occur. Following the Preferred Reporting Items for Systematic Reviews and Meta Analyses framework, 1,232 studies were initially identified from Google Scholar and Crossref, of which 32 studies published between 2002 and 2025 met the inclusion criteria. The findings reveal a persistent expectation and performance gap between auditing standards, particularly ISA 240, and actual audit practice. Although auditors are required to obtain reasonable assurance that financial statements are free from material misstatement due to fraud, high profile corporate failures such as Enron, Wirecard, Carillion and Steinhoff demonstrate recurring deficiencies in fraud detection. The synthesis identifies four dominant factors influencing audit effectiveness: regulatory environment, auditor independence, professional competence and scepticism, and the complexity of fraud schemes. The review further shows that audit failures are driven not only by technical limitations but also by behavioural biases, institutional pressures and increasing fraud sophistication. Regulatory reforms such as the Sarbanes Oxley Act and CLERP 9 have improved compliance but have not eliminated audit deficiencies. The study contributes a multidimensional conceptual framework integrating behavioural, institutional and technological perspectives to explain persistent audit failures. It concludes that improving fraud detection requires a shift from compliance based auditing toward a more integrated approach that combines behavioural insight, enhanced professional training and advanced audit technologies such as artificial intelligence and data analytics.
E. Ocansey, Emmanuel Peprah· International journal of bus...· 0 citations
Financial fraud remains a constant and evolving threat to U.S. financial institutions, damaging market integrity, diminishing public trust, and causing significant economic losses. Internal control systems serve as the first line of defense against such fraud, yet many institutions still face control failures that allow internal and external schemes to thrive. Despite comprehensive regulatory requirements and compliance measures, fraud incidents persist, highlighting ongoing weaknesses in the design and execution of internal controls. This underscores the need for stronger, technology-driven prevention strategies. This research analyzes the effectiveness of internal control systems in preventing and detecting fraud in U.S. financial institutions. It proposes an integrated framework combining governance mechanisms, risk assessment, technological advancements, and human capital development to improve fraud deterrence. The study uses an applied qualitative approach to systematically review and compare evidence from academic journals, government reports, banking regulations, and industry publications. The evidence indicates that successful fraud prevention requires a multi-layered strategy incorporating robust corporate governance, comprehensive risk assessment, segregation of duties, ongoing monitoring, and sophisticated data analytics. Technology-based solutions, especially machine learning and artificial intelligence, typically surpass traditional detection methods. Additionally, corporate governance elements, such as the effectiveness of audit committees and board oversight, are vital in ensuring the effectiveness of internal controls. Based on these findings, financial institutions should enhance their governance frameworks, implement risk-focused internal controls, invest in ongoing monitoring technologies, upgrade employee training programs, and foster stronger collaborations with regulators. Collectively, these measures establish robust fraud prevention systems capable of safeguarding institutional integrity and maintaining public trust.
Keywords: Internal Controls, Fraud Prevention, Fraud Detection, Corporate Governance, COSO Framework, Financial Institutions, Data Analytics, Machine Learning, Regulatory Compliance, Audit Committees.
Abdoulie K Darboe· Radiant Journal of Business...· 0 citations
Fraud and financial mismanagement continue to undermine the efficient utilization of public resources in
educational institutions, particularly within public school systems in developing economies. This study critically reviews
contemporary fraud prevention mechanisms and evaluates the effectiveness of financial oversight practices in promoting
accountability, transparency, and prudent resource management in public schools. Drawing evidence from twenty-four
recent empirical and theoretical studies, the review synthesizes findings on internal control systems, forensic accounting,
audit committees, governance structures, and emerging technological innovations such as artificial intelligence (AI),
blockchain technology, and machine learning. The review adopts a qualitative critical review approach to examine how
these mechanisms contribute to fraud detection, prevention, and financial accountability. Evidence from Nigeria, South
Africa, Indonesia, Kenya, and other jurisdictions indicates that robust internal controls, effective audit systems,
transparent financial reporting, and technology-enabled oversight significantly reduce opportunities for financial fraud.
However, challenges including weak institutional capacity, inadequate governance, political interference, limited
technological infrastructure, and insufficient staff training continue to constrain effective implementation. The review
further argues that technological innovations alone cannot eliminate fraud without complementary governance reforms
and stakeholder commitment. The study concludes that an integrated financial oversight framework combining sound
governance, internal control mechanisms, continuous auditing, forensic accounting, and digital financial monitoring
provides the most sustainable approach to fraud prevention in public school systems. The paper recommends
strengthening institutional accountability, expanding the adoption of digital financial management systems, enhancing
professional capacity building, and reinforcing policy implementation to improve financial integrity and educational
service delivery.
Emmanuel Oyovwedjebre Ebah, Ojike Chinyere Perpetua, Patience Ndidi Utulu et al.· International Journal of Inn...· 0 citations
Background: Financial statement fraud can materially distort stakeholders' assessment of corporate performance and remains difficult to detect when managerial incentives and monitoring weaknesses coexist.
Objective: This study examined the effects of Fraud Star elements—pressure, opportunity, rationalization, capability, and integrity—on financial statement fraud and assessed audit quality as a moderating mechanism in manufacturing companies listed on the Indonesia Stock Exchange (IDX) during 2020–2024.
Methods: A quantitative causal-comparative design was applied to secondary financial and annual-report data. Purposive sampling yielded 120 manufacturing companies and 600 firm-year observations. Financial statement fraud was measured using the Beneish M-Score. Audit quality was operationalized using public accounting firm size (Big Four versus non-Big Four) and audit tenure. The hypotheses were tested using pooled multiple linear regression and Moderated Regression Analysis (MRA).
Results: Pressure, opportunity, rationalization, and capability were positively and significantly associated with financial statement fraud, whereas integrity showed a significant negative association. The model produced an Adjusted R² of 0.684. The interaction estimates indicated that audit quality weakened the positive associations of pressure, opportunity, rationalization, and capability with financial statement fraud and strengthened the negative association of integrity with financial statement fraud.
Conclusion: The findings support the importance of stronger internal controls, management integrity, and rigorous external auditing in reducing financial statement fraud risk. The rationalization result should be interpreted cautiously because Total Accruals to Total Assets (TATA), used as its proxy, is also an input in the Beneish M-Score.
Ibnu Aburizal Nashruddien, A. Juanda, Eko Handayanto· Journal of Business, Social...· 0 citations
The rapid development of digital payments has made financial transactions easier, but it has also increased the risk of fraud and threats to transaction security. This article aims to analyze the influence of internal audit on fraud prevention and transaction security in digital payment systems through a Systematic Literature Review (SLR) approach. The study was conducted by reviewing various literature discussing the role of internal audit, fraud prevention, and digital transaction security. The results indicate that internal audit plays a crucial role in identifying risks, evaluating the effectiveness of internal controls, and supporting fraud detection and prevention through the use of digital technologies such as continuous auditing, data analytics, and real-time transaction monitoring. Furthermore, integrating internal audit with robust control systems and adequate security technology can improve transparency, accountability, and transaction security in digital payments. Thus, internal audit is a crucial factor in supporting fraud prevention and maintaining the reliability of digital payment systems.
Nur Azkiyah Djafar, Sitti Fatira Gumohung, Kiki Amelia Bilondatu et al.· Multidisciplinary Indonesian...· 0 citations
Digital transformation has increased the complexity of fraud risks within organizations, necessitating a more adaptive and integrated internal control system. This study aims to analyze the integration of internal audit, electronic audit, and audit governance in improving the effectiveness of internal control and mitigating fraud risks. This study uses a Systematic Literature Review (SLR) approach by analyzing various scientific literature relevant to the research topic. The results show that independent internal audit, the use of electronic audit technologies such as Big Data Analytics and Blockchain, and audit governance through Whistleblowing Systems and AI Governance have a synergistic relationship in strengthening organizational oversight systems. The integration of these three aspects can improve the effectiveness of fraud detection, maintain the integrity of audit data, and strengthen organizational transparency and accountability. This study provides a conceptual contribution in the form of a digital-based integrated oversight model as a strategy for strengthening internal control in the era of digital transformation.