Financial Management Practices and Fraud Risk Management of Commercial Banks in Kampala, Uganda

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue X, October 2019 | ISSN 2454–6186

Financial Management Practices and Fraud Risk Management of Commercial Banks in Kampala, Uganda

Angellah Mary Nakkungu Ssekamwa^1*, Dr. Mohammad Ssendagi²

^1,2School of Graduate Studies and Research, Team University, Plot 446, Kabaka Ajagara.rd. Kampala-Uganda
*Corresponding Author

Abstract:-This study examined the relationship between financial management practices and fraud risk management in commercial banks in Kampala. This study had a population and sample of 24 licensed commercial banks and adopted a multi research design. The unit of inquiry had 120 respondents; Accounts, Finance, Audit, Risk and Branch Managers. Greed was the most common cause of fraud, forgery and altering cheques was the most common type of fraud. Four hypotheses were formulated and tested using simple regression at a significant level of 5%, Independent T-test and Oneway Anova. Correlation findings revealed a positive significant relationship between financial management practices and fraud risk management; accounting information systems (r = .153, p<.01), financial reporting analysis (r = .186*, p<.01) and forensic accounting (r = .403**, p<.01). Regression analysis showed that fraud risk management was strongly influenced by forensic accounting (beta = 0.430, p<.01), followed by financial reporting analysis (beta = 0.089, p=0.343) and accounting information systems (beta = -0.106, p = 0.305).
The F statistic in ANOVA showed significant linear relationship for all the predictor variables and fraud risk management; financial management practices (F=8.121, sig =0.000), accounting information systems (F=10.755, sig =0.000), financial reporting analysis (F=6.040, sig =0.000) forensic accounting (F=9.969, sig =0.000) and fraud risk management. While financial management practices may have an influence on fraud risk management in commercial banks in Kampala, the relationship is weak at its best. This leaves a gap for further research on other fraud risk management predictor variables.
Every fraud is unique, but the fraudsters can never be too smart. Bank managers need to pay attention to; the causes of fraud and address them promptly; proper accounting information systems management; combining improved systems with strong risk controls; effective financial reporting analysis measures; apply forensic accounting; ensure strategized efforts from all levels of staff; take heed of the lessons from previous fraud occurrences; involve all stakeholders in the fraud risk management process.

Keywords: Financial Management Practices; Financial Reporting Analysis, Accounting Information Systems, Forensic Accounting, Fraud Risk Management; Prevention, Detection, Response.

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