EFFECT OF INTERNAL SYSTEM ON EMPLOYEE FRAUD IN MANUFACTURING COMPANIES IN ILORIN METROPOLIS

Abstract

Fraud prevention has become an issue that some manufacturing companies find themselves

faced with. Internal control is the tool which companies hope to adopt in combating employee

fraud. The main objective of this study was to examine the impact of internal control system on

employee fraud in manufacturing companies in Ilorin Metropolis. The ordered logit regression

method was adopted in testing the viability of the hypotheses put forward. It was concluded that

internal control has an impact on fraud prevention. Findings from the study showed that human

resource policies, managerial accountability and management override of control all have a

positive effect on fraud prevention in manufacturing companies in Ilorin Metropolis. It was

recommended that the human resource (HR) department should follow due process when hiring,

promoting and compensating staff and that internal control guideline should be based on

principles instead of laws