A Study on Fraud Prevention and Detection Methods in Sri Lanka

G K H Peiris,W D N Aruppala

doi:10.4038/kjm.v10i2.7692

Abstract

Forensic accounting is emerging area in countries like Sri Lanka even though it came up many years ago. Corporate frauds have been increasing worldwide, emphasizing the needfulness of forensic accounting and it has become a great opportunity for accountants and other professionals to think beyond the traditional framework. This study examines the perception of accounting professionals regarding the occupational fraud prevention and detection methods and software used in Sri Lanka. The survey was conducted using hundred accounting professionals of Sri Lanka. The results reveal that password protection, external audits, bank reconciliations and internal control review are quite common in use while bank reconciliation, cash review and password protection are also highly employed methods to detect occupational frauds. However, fraud hotline, forensic auditing and forensic accountants are identified as the least used methods. Further, filtering software, virus protection and firewalls could be identified as the commonly used fraud prevention and detection software used in Sri Lankan context. Implementation of effective fraud preventing and detecting methods, software is highly recommended on preventing and detecting corporate frauds in Sri Lanka.

Highlights

Background of the StudyThe fraud risk is a challenge to all organizations and individuals
Main objective of this study is to identify perception of accounting professionals regarding the occupational fraud prevention and detection methods and software used in Sri Lanka
Around 32% of the survey participants indicated that their company had been a victim of fraud, nearly 61% indicated that their company had not been a victim of fraud and 6% indicated that they did not know whether or not their company was a victim of fraud. 42% of participants expected fraud to increase in the future, while 29% did not expect fraud to increase and remaining 29% did not know. 58% of participants indicated funding for fraud prevention training had increased over the last three years, while 35% said it remained the same and only 7% said it decreased

Summary

Introduction

Background of the StudyThe fraud risk is a challenge to all organizations and individuals. In a global study on occupational fraud and abuse, the median response according to the professional experience of the respondents who are from more than 125 countries, is that organizations lose 5% of their annual revenues due to fraud. To place their estimate in context, if that 5% loss estimate were applied to $90.52 trillion which is the estimated Gross World Product in 2019, it would result in a projected total global fraud loss of $4.5 trillion approximately each year (Report to the Nations, 2020)

Methods

Results

Conclusion