Abstract:
The main purpose of the study was to establish the effect of internal control system on fraud prevention in banking sector in Kenya. The study
involved all the banks where branch managers, operations managers and cash supervisors were sought for the study. The study analysed 117
questionnaires from respondents. Factor analysis was used to reduce the number of variables for analysis purposes. Correlational research study and
structural equation model were applied in the study to establish the relationship between variables and in analysis of hypotheses. The study found that
control environment and control activities have no statistically significant effect on fraud prevention whereas risk assessment, monitoring of activities and
communication of information have statistically significant effect on fraud prevention. Discussions based on the results and related studies were
provided. Limitations of the study were highlighted. Recommendations based on the findings were provided. The recommendations were on policy,
practise and further research in the same or related areas.
