THE RELATIONSHIP BETWEEN PUBLIC SECTOR INTERNAL CONTROLS AND FRAUD PREVENTION
Keywords:
Internal controls, fraud prevention, public sector, accountability, governanceAbstract
This study examines the relationship between public sector internal controls and fraud prevention by employing a literature review method. Internal control systems serve as an essential mechanism to safeguard public resources, ensure accountability, and uphold transparency in government financial management. A well-structured internal control framework, which includes preventive, detective, and corrective mechanisms, plays a critical role in mitigating fraud risks by reducing opportunities for misconduct. Through a comprehensive analysis of previous studies, this research highlights that effective internal controls such as segregation of duties, monitoring, risk assessment, and ethical leadership significantly contribute to the reduction of fraudulent practices in the public sector. Furthermore, the findings suggest that the success of fraud prevention efforts is not solely determined by formal control mechanisms, but also by the integrity, competence, and commitment of public officials in enforcing these controls. The study concludes that strengthening internal control systems in the public sector is vital for enhancing good governance and preventing corruption.
Downloads
References
Aggarwal, P., & Agarwala, T. (2022). Relationship of green human resource management with environmental performance: Mediating effect of green organizational culture. Benchmarking: An International Journal, 30(7), 2351–2376. https://doi.org/10.1108/BIJ-08-2021-0474
ALAWAQLEH, Q. A. (2021). The Effect of Internal Control on Employee Performance of Small and Medium-Sized Enterprises in Jordan: The Role of Accounting Information System. The Journal of Asian Finance, Economics and Business, 8(3), 855–863. https://doi.org/10.13106/JAFEB.2021.VOL8.NO3.0855
Avortri, C., & Agbanyo, R. (2020). Determinants of management fraud in the banking sector of Ghana: The perspective of the diamond fraud theory. Journal of Financial Crime, 28(1), 142–155. https://doi.org/10.1108/JFC-06-2020-0102
Boudjelka, L. (2025). Internal Public Sector Control: A Review of Frameworks for Effective Governance. مجلة البحوث الاقتصادية المتقدمة, 10(1), 520–531.
Brenya Bonsu, A., Appiah, K. O., Gyimah, P., & Owusu-Afriyie, R. (2022). Public sector accountability: Do leadership practices, integrity and internal control systems matter? IIM Ranchi Journal of Management Studies, 2(1), 4–15. https://doi.org/10.1108/IRJMS-02-2022-0010
Chan, K. C., Chen, Y., & Liu, B. (2021). The Linear and Non-Linear Effects of Internal Control and Its Five Components on Corporate Innovation: Evidence from Chinese Firms Using the COSO Framework. European Accounting Review. https://www.tandfonline.com/doi/abs/10.1080/09638180.2020.1776626
Christianah Pelumi Efunniyi, Angela Omozele Abhulimen, Anwuli Nkemchor Obiki-Osafiele, Olajide Soji Osundare, Edith Ebele Agu, & Ibrahim Adedeji Adeniran. (2024). Strengthening corporate governance and financial compliance: Enhancing accountability and transparency. Finance & Accounting Research Journal, 6(8), 1597–1616. https://doi.org/10.51594/farj.v6i8.1509
Closing the AI accountability gap | Proceedings of the 2020 Conference on Fairness, Accountability, and Transparency (world). (n.d.). ACM Conferences. https://doi.org/10.1145/3351095.3372873
Demirović, L., Isaković-Kaplan, Š., & Proho, M. (2021). Internal Audit Risk Assessment in the Function of Fraud Detection. Journal of Forensic Accounting Profession, 1(1), 35–49. https://doi.org/10.2478/jfap-2021-0003
Felício, T., Samagaio, A., & Rodrigues, R. (2021). Adoption of management control systems and performance in public sector organizations. Journal of Business Research, 124, 593–602. https://doi.org/10.1016/j.jbusres.2020.10.069
HARDININGSIH, P., UDIN, U., MASDJOJO, Greg. N., & SRIMINDARTI, C. (2020). Does Competency, Commitment, and Internal Control Influence Accountability? The Journal of Asian Finance, Economics and Business, 7(4), 223–233. https://doi.org/10.13106/JAFEB.2020.VOL7.NO4.223
Herawaty, N., & Hernando, R. (2020). Analysis of Internal Control of Good Corporate Governance and Fraud Prevention (Study at the Regional Government of Jambi City). SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS, 103–118. https://doi.org/10.29259/sijdeb.v4i2.103-118
Kaur, B., Sood, K., & Grima, S. (2022a). A systematic review on forensic accounting and its contribution towards fraud detection and prevention. Journal of Financial Regulation and Compliance, 31(1), 60–95. https://doi.org/10.1108/JFRC-02-2022-0015
Kaur, B., Sood, K., & Grima, S. (2022b). A systematic review on forensic accounting and its contribution towards fraud detection and prevention. Journal of Financial Regulation and Compliance, 31(1), 60–95. https://doi.org/10.1108/JFRC-02-2022-0015
Klychova, G., Zaugarova, E., Zakirova, A., Dyatlova, A., & Gimadiev, I. (2021). Control and analytical aspects of the management of financial results of enterprises. E3S Web of Conferences, 273, 10039. https://doi.org/10.1051/e3sconf/202127310039
Koomson, T. A. A., Owusu, G. M. Y., Bekoe, R. A., & Oquaye, M. (2020). Determinants of asset misappropriation at the workplace: The moderating role of perceived strength of internal controls. Journal of Financial Crime, 27(4), 1191–1211. https://doi.org/10.1108/JFC-04-2020-0067
Lartey, P. Y., Kong, Y., Bah, F. B. M., Santosh, R. J., & Gumah, I. A. (2020). Determinants of Internal Control Compliance in Public Organizations; Using Preventive, Detective, Corrective and Directive Controls. International Journal of Public Administration. https://www.tandfonline.com/doi/abs/10.1080/01900692.2019.1645689
Lasrado, F., & Kassem, R. (2020). Let’s get everyone involved! The effects of transformational leadership and organizational culture on organizational excellence. International Journal of Quality & Reliability Management, 38(1), 169–194. https://doi.org/10.1108/IJQRM-11-2019-0349
Leso, B. H., Cortimiglia, M. N., & Ghezzi, A. (2023). The contribution of organizational culture, structure, and leadership factors in the digital transformation of SMEs: A mixed-methods approach. Cognition, Technology & Work, 25(1), 151–179. https://doi.org/10.1007/s10111-022-00714-2
Madolidi Handoyo, B. R., & Bayunitri, B. I. (2021a). The Influence of Internal Audit and Internal Control Toward Fraud Prevention. International Journal of Financial, Accounting, and Management, 3(1), 45–64. https://doi.org/10.35912/ijfam.v3i1.181
Madolidi Handoyo, B. R., & Bayunitri, B. I. (2021b). The Influence of Internal Audit and Internal Control Toward Fraud Prevention. International Journal of Financial, Accounting, and Management, 3(1), 45–64. https://doi.org/10.35912/ijfam.v3i1.181
Musah, A., Padi, A., Blay, M. W., Okyere, D. O., & Ofori, B. S. (2025). Ethical organisational culture, effective internal control systems and tax compliance of small and medium scale enterprises (SMEs): The role of corporate governance. Social Sciences & Humanities Open, 11, 101331. https://doi.org/10.1016/j.ssaho.2025.101331
Musyoki, K. M. (2023a). Internal Control Systems and their role in Financial Fraud Prevention in Kenya. African Journal of Commercial Studies, 3(3), 173–180.
Musyoki, K. M. (2023b). Internal Control Systems and their role in Financial Fraud Prevention in Kenya. African Journal of Commercial Studies, 3(3), 173–180.
Nadirsyah, Indriani, M., & Mulyany, R. (2024). Enhancing fraud prevention and internal control: The key role of internal audit in public sector governance. Cogent Business & Management. https://www.tandfonline.com/doi/abs/10.1080/23311975.2024.2382389
Nasir, M., Simsek, S., Cornelsen, E., Ragothaman, S., & Dag, A. (2021). Developing a decision support system to detect material weaknesses in internal control. Decision Support Systems, 151, 113631. https://doi.org/10.1016/j.dss.2021.113631
Rashid, C. A. (2022a). The role of internal control in fraud prevention and detection. Journal of Global Economics and Business, 3(8), 43–55. https://doi.org/10.31039/jgeb.v3i8.40
Rashid, C. A. (2022b). The role of internal control in fraud prevention and detection. Journal of Global Economics and Business, 3(8), 43–55. https://doi.org/10.31039/jgeb.v3i8.40
Rashid, C. A. (2022c). The role of internal control in fraud prevention and detection. Journal of Global Economics and Business, 3(8), 43–55. https://doi.org/10.31039/jgeb.v3i8.40
Sofyani, H., Pratolo, S., & Saleh, Z. (2021). Do accountability and transparency promote community trust? Evidence from village government in Indonesia. Journal of Accounting & Organizational Change, 18(3), 397–418. https://doi.org/10.1108/JAOC-06-2020-0070
Sofyani, H., Riyadh, H. A., & Fahlevi, H. (2020). Improving service quality, accountability and transparency of local government: The intervening role of information technology governance. Cogent Business & Management. https://www.tandfonline.com/doi/abs/10.1080/23311975.2020.1735690
Sudirman, S., Sasmita, H., D, M. D., Krisnanto, B., & Muchsidin, F. F. (2021a). Effectiveness of Internal Audit in Supporting Internal Control and Prevention of Fraud. Bongaya Journal of Research in Accounting (BJRA), 4(1), 8–15. https://doi.org/10.37888/bjra.v4i1.271
Sudirman, S., Sasmita, H., D, M. D., Krisnanto, B., & Muchsidin, F. F. (2021b). Effectiveness of Internal Audit in Supporting Internal Control and Prevention of Fraud. Bongaya Journal of Research in Accounting (BJRA), 4(1), 8–15. https://doi.org/10.37888/bjra.v4i1.271
SUMARYATI, A., PRAPTIKA NOVITASARI, E., & MACHMUDDAH, Z. (2020a). Accounting Information System, Internal Control System, Human Resource Competency and Quality of Local Government Financial Statements in Indonesia. The Journal of Asian Finance, Economics and Business, 7(10), 795–802. https://doi.org/10.13106/JAFEB.2020.VOL7.N10.795
SUMARYATI, A., PRAPTIKA NOVITASARI, E., & MACHMUDDAH, Z. (2020b). Accounting Information System, Internal Control System, Human Resource Competency and Quality of Local Government Financial Statements in Indonesia. The Journal of Asian Finance, Economics and Business, 7(10), 795–802. https://doi.org/10.13106/JAFEB.2020.VOL7.N10.795
Vutumu, A., Aregbeyen, O., & Akinteye, A. S. (2024). Internal Control and Fraud Prevention in the Nigerian Public Sector: A Partial Least Square Structural Equation Modeling Approach. Journal of Financial Risk Management, 13(4), 703–729. https://doi.org/10.4236/jfrm.2024.134034
