Impact of Internal Control on Fraud Reduction in Small and Medium-sized Enterprises in Myanmar
Keywords:
Control activities, Internal Control, Monitoring activities, Reduction of Fraudulence, Risk assessment, Small and medium-sized enterprisesAbstract
Businesses are facing increased fraudulence as there is an overall increase in economic crime all around the world. Perpetrating fraud can occur in a business or an organization if there is a lack of an effective internal control system. The objective of the study is to study the impact of internal control on reduction of fraudulence in Small and Medium-sized Enterprises in Mandalay, Myanmar. A cross sectional analytical study design was used and a total of 140 executives participated. An interviewer-administered structured questionnaire with five sections was used to collect the data. Independent variables were three dimensions of internal control (“risk assessmentâ€, “control activitiesâ€, and “monitoring activities†and dependent variable included reduction of fraudulence. For data analysis, a statistical package for the social sciences (SPSS) was used and continuous data were presented with mean and its standard deviation while categorical data were interpreted with frequency and percentage. A Pearson’s correlation analysis was used for inferential analysis and statistically significant association was set with p < 0.05. There are positive linear relationships of reduction of fraudulence with “risk assessment†(r= 0.370, p< 0.001), “control activities†(r= 0.473, p< 0.001), and “monitoring activities†(r= 0.792, p< 0.001). In conclusion, SMEs should be able to maintain an incredibly simple internal control system in their business, particularly monitoring and regulating their activities using all three components, if there is not an efficient internal control system in place. Businesses can focus on improving internal control, not just in huge companies but also in smaller companies.
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