THE EFFECTIVENESS OF ETHICAL CULTURE, INTERNAL CONTROL, AND INFORMATION TECHNOLOGY SYSTEMS ON OCCUPATIONAL FRAUD IN SMES: EMPLOYEES’ PERSPECTIVE
DOI:
https://doi.org/10.35631/AIJBES.829115Keywords:
Ethical Culture, Fraud, Information Technology, Internal Control, Risk, SMEsAbstract
The purpose of this study is to examine the effectiveness of fraud prevention mechanisms, namely, ethical culture, internal control, and information technology systems, in preventing occupational fraud in SMEs. Questionnaires were distributed to 500 employees in SMEs in the Klang Valley to obtain the required data. From the original 500 distributed questionnaires, 133 usable responses were returned. The analyses conducted were descriptive, reliability, normality, Pearson correlation coefficient, and multiple regression analyses. The results found significant relationships between ethical culture, information technology systems, and occupational fraud. These results show that employees perceived ethical culture and information technology systems as the most effective fraud prevention mechanisms. Meanwhile, it is quite interesting that internal controls are not deemed a useful tool despite various studies emphasising the formulation of strong internal controls as a mechanism to curb potentially fraudulent activities. This study has potential benefits to SME owners, managers, employees, and policymakers as they work to improve the effectiveness of fraud prevention mechanisms by enhancing the ethical culture and information technology system.
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