David Ndung’u Kiragu
Finance and Accounting,
Dedan Kimathi University of Technology.
P.O. Box 657-1010, Nyeri, Kenya.
Tel: +254 701573477
Lucy Waigumo Gikiri
P.O. Box 51755- GPO, Nairobi, Kenya,
Winnie Nyamute Iminza
Accounting and Finance Department,
University of Nairobi,
P.O Box 30197-00100 Nairobi, Kenya
CITATION: Kiragu, N. D., Gikiri. W. L & Iminza, N. W (2015). Operational Governance and Occupational Fraud Risk in Commercial Banks in Kenya: A Positivism Approach. European Journal of Business Management, 2 (1), 401-423
Association of Certified Fraud Examiners caution that globally, a typical organization loses at least 5% its annual revenue through occupational fraud. Further statistics indicate that occupational fraud risk is highest in commercial banks than any other industry globally. Occupational fraud risk is therefore a global problem. The problem is that Kenya has the highest incidences of fraud is East Africa. The study set to determine the effect of operational governance on occupational fraud risk in commercial banks in Kenya. Using a positivism research paradigm and a descriptive research design, a representative stratified sample of 30 commercial banks out of the 43 commercial banks licensed by Central Bank of Kenya by June 30, 2012 was used in this study. Principal Component Analysis, Varimax, Orthogonal was used for Factor analysis. Kaiser-Meyer-Olkin test of sampling adequacy was used together with Bartlett’s test of Sphericity to assess factorability of the predictor variable. Cronbach’s alpha coefficient was used to assess the data collection tool for stability and consistency. Factor analysis was used to asses construct validity. In order to test the null hypothesis, that is, there is no relationship between operational governance and occupational fraud risk in commercial banks in Kenya, model fitness, ANOVA and Regression coefficients were generated and interpreted. The study found that there is a positive but weak correlation between operational governance and occupational fraud risk. Further, the study found that the relationship is not statistically significant. These results provide insights into the occupational fraud risk controls relevance and could guide the regulatory authorities approach to the design of antifraud controls in Kenya and developing countries.
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